Taxes Consolidation Act 1997

(11) Where for any year of assessment a loss is aggregated with profits or gains in accordance with subsection (5)(b) and the amount of the loss is in excess of the profits or gains, one-third of the amount of such excess shall be deemed for the purposes of Chapter 1 of Part 12 to be a loss sustained in the trade of farming in the final year of the 3 years on the average of the profits or gains of which the individual is to be charged to tax for that year of assessment, and any loss so aggregated shall not be eligible for relief under any provision of the Income Tax Acts apart from this subsection.

(12) The profits or gains from farming on which an individual is to be charged to tax for any year of assessment by virtue of subsection (6) in accordance with subsection (5) shall be deemed to be the profits or gains from farming of that individual in determining his or her total income for that year for the purposes of the Income Tax Acts apart from this section, and any provision of those Acts relating to the delivery of any return, account (including balance sheet), statement, declaration, book, list or other document or the furnishing of any particulars shall apply as if this section had not been enacted.

658 Farming: allowances for capital expenditure on construction of buildings and other works. [FA74 s22(1) to (3) and (5) to (11); CTA76 s21(1) and Sch1 par70; FA83 s15; FA93 s34(2); FA94 s23]

658.—(1) This section shall apply to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655.

(2) (a) Where a person to whom this section applies incurs, for the purpose of a trade of farming land occupied by such person, any capital expenditure on the construction of farm buildings (excluding a building or part of a building used as a dwelling), fences, roadways, holding yards, drains or land reclamation or other works, there shall be made to such person during a writing-down period of 7 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm buildings allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(b) As respects each of the first 6 years of the writing-down period, the farm buildings allowance to be made under this subsection shall be 15 per cent of the capital expenditure referred to in paragraph (a) and, as respects the last year of the writing-down period, the farm buildings allowance to be made under this subsection shall be 10 per cent of that expenditure.

(c) Where the capital expenditure referred to in paragraph (a) was incurred before the 27th day of January, 1994, this section shall apply subject to paragraph 23 of Schedule 32.

(3) For the purposes of the application to this section of section 321, “basis period” has the meaning assigned to it by section 306.

(4) Where for any year of assessment an individual is not chargeable to income tax in respect of profits or gains from farming in accordance with Chapter 3 of Part 4, and that year is a year of assessment in respect of which, if the individual had been so chargeable, he or she could have claimed a farm buildings allowance under this section, that allowance shall for the purposes of this section be deemed to have been made for that year of assessment and shall not be carried forward and set off against profits or gains chargeable for any subsequent year of assessment.

(5) Any capital expenditure incurred by a person about to carry on farming but before commencing farming shall for the purposes of this section be treated as if it had been incurred on the first day on which the person commences farming.

(6) Any claim for a farm buildings allowance to be made to a person under this section shall be included in the annual statement required to be delivered by the person under the Income Tax Acts of the profits or gains from farming, and section 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

(7) Any claim for a farm buildings allowance under this section shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to that person of the decision, appeal to the Appeal Commissioners.

(8) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (7) as if it were an appeal against an assessment to tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(9) Subject to subsection (10), where a person who is entitled to a farm buildings allowance under this section in respect of capital expenditure incurred for the purpose of farming farm land transfers such person's interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person, be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(10) Where the transfer of interest to which subsection (9) refers takes place in relation to part of the farm land, subsection (9) shall apply to so much of the allowance as is properly referable to that part of the land as if it were a separate allowance.

(11) Where expenditure is incurred partly for the purposes of farming and partly for other purposes, subsection (2) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of farming.

(12) No farm buildings allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of that expenditure under Chapter 1 of Part 9.

(13) Expenditure shall not be regarded for the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

659 Farming: allowances for capital expenditure on the construction of farm buildings, etc. for control of pollution. [FA97 s20(1) to (13)]

659.—(1) This section shall apply to any person—

(a) carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655,

(b) for whom, in respect of capital expenditure to which paragraph (c) refers and in respect of farm land occupied by him or her, a farm nutrient management plan has been drawn up by an agency or planner approved to draw up such plans by the Department of Agriculture and Food, and drawn up in accordance with—

(i) the guidelines in relation to such plans entitled “Farm Nutrient Management Plan” issued by the Department of Agriculture, Food and Forestry on the 21st day of March, 1997, or

(ii) a plan drawn up under the scheme known as the Rural Environment Protection Scheme (REPS) or the scheme known as the Erne Catchment Nutrient Management Scheme, both being schemes administered by the Department of Agriculture and Food,

and

(c) who incurs capital expenditure on or after the 6th day of April, 1997, and before the 6th day of April, 2000, on the construction of those farm buildings (excluding a building or part of a building used as a dwelling) or structures specified in the Table to this section in the course of a trade of farming land occupied by such person where such building or structures are constructed in accordance with that farm nutrient management plan and are certified as being necessary by that agency or planner for the purpose of securing a reduction in or the elimination of any pollution arising from the trade of farming.

(2) Subject to the provisions of Article 6 of Council Regulation (EEC) No. 2328/91 of 15 July 1991[^1] on improving the efficiency of agricultural structures, as amended, and subject to subsection (3), where a person to whom this section applies—

(a) has delivered to the Department of Agriculture and Food, a farm nutrient management plan referred to in subsection (1)(b), and

(b) incurs capital expenditure to which subsection (1) applies,

there shall be made to such person during a writing-down period of 8 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm pollution control allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(3) The farm pollution control allowances to be made in accordance with subsection (2) in respect of capital expenditure incurred in a chargeable period shall be—

(a) as respects the first year of the writing-down period referred to in subsection (2)—

(i) where the capital expenditure incurred has not exceeded £20,000, an amount equal to 50 per cent of that expenditure, or

(ii) where the capital expenditure incurred has exceeded £20,000, an amount equal to £10,000,

(b) as respects the next 6 years of that writing-down period, an amount equal to 15 per cent of the balance of that expenditure after deducting the amount of any allowance made by virtue of paragraph (a), and

(c) as respects the last year of that writing-down period, an amount equal to 10 per cent of the balance of that expenditure after deducting the amount of any allowance made by virtue of paragraph (a).

(4) For the purposes of the application to this section of section 321, “basis period” has the meaning assigned to it by section 306.

(5) Any claim by a person for a farm pollution control allowance to be made to such person shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and section 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

(6) Any claim for a farm pollution control allowance shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to the person of the decision, appeal to the Appeal Commissioners.

(7) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (6) as if it were an appeal against an assessment to tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(8) Subject to subsection (9), where a person who is entitled to farm pollution control allowances in respect of farm land occupied by the person transfers his or her interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person, be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(9) Where the transfer of interest to which subsection (8) refers took place in relation to part of the farm land, subsection (8) shall apply to so much of the farm pollution control allowance as is properly referable to that part of the land as if it were a separate allowance.

(10) Where expenditure is incurred partly for a purpose for which a farm pollution control allowance is to be made and partly for another purpose, subsection (2) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the first-mentioned purpose.

(11) No farm pollution control allowance shall be made in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of that expenditure under Chapter 1 of Part 9 or section 658.

(12) Expenditure shall not be regarded for the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

(13) For the purposes only of determining, in relation to a claim for a farm pollution control allowance, whether and to what extent capital expenditure incurred on the construction of a building or structure to which this section applies is incurred or not incurred in the period specified in subsection (1)(c), only such an amount of that capital expenditure as is properly attributable to work on the construction of the building or structure actually carried out during that 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.

TABLE

Farm Buildings and Structures to Which Allowances for the Control of Pollution Apply

660 Farming: wear and tear allowances deemed to have been made in certain cases. [FA74 s25; CTA76 s21(1) and Sch1 par71; FA78 s14(c)]

660.—(1) In this section—

“balancing allowance” and “balancing charge” have the same meanings respectively as in Chapter 2 of Part 9;

“wear and tear allowance” means an allowance made under section 284.

(2) In determining whether any, and if so what, wear and tear allowance, balancing allowance or balancing charge in respect of machinery or plant is to be made to or on any person for any chargeable period in taxing a trade of farming, there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to that person and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have been made to that person if, in relation to every such previous chargeable period—

(a) the profits or gains from farming had been chargeable to tax under Case I of Schedule D,

(b) those profits or gains had been charged to tax in accordance with section 58 of the Income Tax Act, 1967, and not in an amount determined under section 21 of the Finance Act, 1974,

(c) farming had been carried on by that person since the date on which that person acquired the machinery or plant,

(d) the machinery or plant had been used by that person solely for the purposes of farming since that date, and

(e) a proper claim had been duly made by that person for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

(3) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant concerned belonged to the person and—

(a) during which the machinery or plant was not used by the person for the purposes of farming,

(b) in respect of which the person was charged to tax on an amount determined in accordance with section 21 of the Finance Act, 1974,

(c) during which farming was not carried on by the person, or

(d) during which farming was carried on by the person in such circumstances that the full amount of the profits or gains of farming was not liable to be charged to tax under Case I of Schedule D.

(4) In the case of a company (within the meaning of section 4(1)), subsection (2)(c) shall not alter the periods which are to be taken as chargeable periods but, if during any period after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that period shall be taken as a chargeable period as if it had been an accounting period of the company.

(5) Nothing in this section shall affect section 288(4).

661 Farming: restriction of relief in respect of certain losses. [FA78 s15(1) and (2); FA83 s120 and Sch4]

661.—(1) This section shall apply to a loss sustained by a person in the carrying on of farming in any year of assessment, being a year for which such person was not chargeable to tax in respect of profits or gains from farming.

(2) No relief shall be given under section 382 in respect of a loss to which this section applies by deducting such loss from or setting it off against the amount of the profits or gains from farming assessed for any year of assessment.

662 Income tax: restriction of relief, for losses in farming or market gardening. [FA74 s27(1) to (6); FA75 s33(2) and Sch1 ptII; FA96 s132(2) and Sch5 PtII]

662.—(1) In this section—

“prior 3 years”, in relation to a loss incurred in a year of assessment, means the last 3 years of assessment before that year;

“prior period of loss” means the prior 3 years or, if losses were incurred in successive years of assessment amounting in the aggregate to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

(2) (a) Any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in a trade of farming or market gardening shall not be available for relief under section 381 unless it is shown that, for the year of assessment in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) Without prejudice to paragraph (a), any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in any year of assessment in a trade of farming or market gardening shall not be available for relief under section 381 if in each of the prior 3 years a loss was incurred in carrying on that trade.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss or any capital allowance where it is shown by the claimant—

(i) that the whole of the claimant's farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

(ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) In ascertaining for the purposes of this section whether a loss was incurred in any year, the rules applicable to Case I of Schedule D shall be applied.

(4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of a year of assessment by reason of its being set up and commenced, or discontinued, or both, in that year, subsection (2) shall apply in relation to that trade as regards that part of that year.

(5) subsection (2) shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Income Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade.

(6) Notwithstanding subsection (5), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person.

663 Corporation tax: restriction of relief for losses in farming or market gardening. [CTA76 s17]

663.—(1) In this section—

“prior 3 years”, in relation to a loss incurred in an accounting period, means the last 3 years before the beginning of the accounting period.

“prior period of loss” means the prior 3 years or, if losses were incurred in successive accounting periods amounting in all to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

(2) (a) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 396(2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) (i) In this paragraph, “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D but so that, notwithstanding sections 307 and 308, no account shall be taken of any allowance or charge which otherwise would be taken into account under those sections.

(ii) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 396(2) if a loss computed without regard to capital allowances was incurred in carrying on that trade in that accounting period and in each of the accounting periods wholly or partly comprised in the prior 3 years.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss where it is shown by the claimant company—

(i) that the whole of its farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

(ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade; but a trade shall not be treated as discontinued if under section 400(6) it is not to be treated as discontinued for the purpose of capital allowances and charges.

(4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall apply in relation to that trade as regards that part of that accounting period.

(5) Notwithstanding subsection (3), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person, who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person, and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

664 Relief for certain income from leasing of farm land. [ITA67 s195B(3) and (6); FA85 s10, FA87 s2, FA91 s10; FA93 s10(1); FA96 s10, s132(1) and Sch5 ptI par14]

664.—(1) (a) In this section—

“farm land” means land in the State wholly or mainly occupied for the purposes of husbandry and includes a building (other than a building or part of a building used as a dwelling) situated on the land and used for the purposes of farming that land;

“lease”, “lessee”, “lessor” and “rent” have the same meanings respectively as in Chapter 8 of Part 4;

“qualifying lease” means a lease of farm land which is—

(i) in writing or evidenced in writing,

(ii) for a definite term of 5 years or more, and

(iii) made on an arm's length basis between a qualifying lessor or qualifying lessors and a lessee or lessees who is, or each of whom is, a qualifying lessee in relation to the qualifying lessor or the qualifying lessors;

“qualifying lessee”, in relation to a qualifying lessor or qualifying lessors, means an individual—

(i) who is not connected with the qualifying lessor or with any of the qualifying lessors, and

(ii) who uses any farm land leased by him or her from the qualifying lessor or the qualifying lessors for the purposes of a trade of farming carried on by him or her solely or in partnership;

“qualifying lessor” means an individual who—

(i) is aged 55 years or over or is permanently incapacitated by reason of mental or physical infirmity from carrying on a trade of farming, and

(ii) has not after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is or are, or one of whom is, connected with him or her, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at arm's length;

“the specified amount”, in relation to any surplus or surpluses (within the meaning of section 97(1)) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means, subject to paragraph (b), the lesser of—

(i) the amount of that surplus or the aggregate amount of those surpluses,

(ii) as respects a qualifying lease or qualifying leases made—

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, £2,000,

(II) in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, £2,800,

(III) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991, £2,000,

(IV) in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996—

(A) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) £3,000, in any other case, or

(V) on or after the 23rd day of January, 1996—

(A) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) £4,000, in any other case,

and

(iii) where the rent or rents was or were not receivable in respect of a full year's letting or lettings, such amount as bears to the amount determined in accordance with clause (I), (II), (III), (IV) or (V), as may be appropriate, of subparagraph (ii) the same proportion as the amount of the rent or the aggregate amount of the rents bears to the amount of the rent or the aggregate amount of the rents which would be receivable for a full year's letting or lettings.

(b) Where the income of a qualifying lessor consists of or includes rent or rents—

(i) from a qualifying lease or qualifying leases made in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, and from a qualifying lease made—

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, or

(II) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991,

the specified amount shall not exceed £2,800;

(ii) from a qualifying lease or qualifying leases made in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996, and from a qualifying lease made before the 30th day of January, 1991, the specified amount shall not exceed—

(I) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) £3,000, in any other case;

(iii) from a qualifying lease or qualifying leases made on or after the 23rd day of January, 1996, and from a qualifying lease made at any other time, the specified amount shall not exceed—

(I) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) £4,000, in any other case.

(2) Where for any year of assessment—

(a) the total income of a qualifying lessor consists of or includes any profits or gains chargeable to tax under Case V of Schedule D, and

(b) any surplus or surpluses (within the meaning of section (97)(1)) arising in respect of the rent or rents from any farm land let under a qualifying lease or qualifying leases has been or have been taken into account in computing the amount of those profits or gains,

the qualifying lessor shall in determining that total income be entitled to a deduction of the lesser of—

(i) the specified amount in relation to the surplus or surpluses, and

(ii) the amount of the profits or gains.

(3) The amount of any deduction due under subsection (2) shall—

(a) where by virtue of section 1017 a woman's income is deemed to be her husband's income, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section, or

(b) where by virtue of section 1017 a man's income is deemed to be his wife's income, be determined separately as regards the part of her income which is hers by virtue of that section and the part which is hers apart from that section,

and where section 1023 applies any deduction allowed by virtue of subsection (2) shall be allocated to the person and to his or her spouse as if they were not married.

(4) (a) For the purposes of subsection (2), where a single qualifying lease relates to both farm land and other property, goods or services, only such amount, if any, of the surplus arising in respect of the rent payable under the lease as is determined by the inspector and after such apportionments of rent, expenses and other deductions as are necessary, according to the best of the inspector's knowledge and judgment, to be properly attributable to the lease of the farm land shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

(b) Any amount which by virtue of paragraph (a) is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against that determination.

(5) For the purposes of determining the amount of any relief to be granted under this section, the inspector may by notice in writing require the lessor to furnish such information as the inspector considers necessary.

(6) (a) Subsections (1) and (2) of section 459 and section 460 shall apply to a deduction under this section as they apply to any allowance, deduction, relief or reduction under the provisions specified in the Table to section 458.

(b) Subsections (3) and (4) of section 459 and paragraph 8 of Schedule 28 shall, with any necessary modifications, apply in relation to a deduction under this section.

CHAPTER 2 Farming: relief for increase in stock values

665 Interpretation (Chapter 2). [FA96 s133]

665.—In this Chapter—

“accounting period”, in relation to a person, means—

(a) where the person is a company, an accounting period determined in accordance with section 27, or

(b) where the person is not a company, a period of one year ending on the date to which the accounts of the person are usually made up,

but, where accounts have not been made up or where accounts have been made up for a greater or lesser period than one year, the accounting period shall be such period not exceeding one year as the Revenue Commissioners may determine;

“chargeable period” has the same meaning as in section 321(2);

“company” has the same meaning as in section 4;

“period of account”, in relation to a person, means a period for which the accounts of the person have been made up;

“person” means a person resident in the State and not resident elsewhere and, unless the contrary intention appears, includes a company;

“specified return date for the chargeable period” has the same meaning as in section 950;

“trading income”, in relation to the trade of farming, means—

(a) where the person is a company, the income from the trade computed in accordance with the rules applicable to Case I of Schedule D, or

(b) in the case of any other person, the profits or gains of the trade computed in accordance with the rules applicable to Case I of Schedule D;

“trading stock”, in relation to the trade of farming, has the same meaning as in section 89 and, in determining the value of a person's trading stock at any time for the purposes of a deduction under section 666, to the extent that at or before that time any payments on account have been received by the person in respect of any trading stock, the value of that stock shall be reduced accordingly.

666 Deduction for increase in stock values. [FA96 s134; FA97 s18]

666.—(1) Subject to this Chapter, where—

(a) a person carries on in an accounting period the trade of farming in respect of which the person is within the charge to tax under Case I of Schedule D, and

(b) the value of the person's trading stock of that trade at the end of the accounting period (in this Chapter referred to as its “closing stock value”) exceeds the value of the trading stock of that trade at the beginning of the accounting period (in this Chapter referred to as its “opening stock value”),

the person shall, in the computation for the purposes of tax of the trading income of that trade, be entitled to a deduction under this section equal to 25 per cent of the amount of that excess as if the deduction were a trading expense incurred in the accounting period, and the amount of that excess is referred to in this Chapter as the person's “increase in stock value”.

(2) In the case of a company—

(a) the amount of the deduction under this section in an accounting period shall not exceed the amount of the company's trading income for that period after all reductions of income for that period by virtue of sections 396 and 397 and after all deductions and additions for that period by virtue of sections 307 and 308 and before any deduction allowed by virtue of this section, and

(b) where a deduction allowed by virtue of this section in computing the company's income from the trade of farming for an accounting period applies for an accounting period (in this subsection referred to as “the relevant period”), the company shall not be entitled to—

(i) a deduction under section 307 or 308 for any accounting period later than the relevant period in respect of any allowance treated as a trading loss of the trade before the commencement of the relevant period,

(ii) a set-off of a loss under section 396 for any accounting period later than the relevant period in respect of a loss sustained in the trade before the commencement of the relevant period, or

(iii) a set-off of a loss under section 397 for any accounting period earlier than the relevant period in respect of a loss sustained in the trade.

(3) In the case of a person other than a company, where a deduction allowed by virtue of this section in computing the person's trading profits of the trade of farming for an accounting period applies for a year of assessment (in this subsection referred to as “the relevant year”)—

(a) the person shall not be entitled to relief—

(i) under section 382 for any year of assessment later than the relevant year in respect of a loss sustained in the trade before the commencement of the relevant year, or

(ii) under section 385 for any year of assessment earlier than the relevant year in respect of a loss sustained in the trade,

(b) section 304(4) or that section as applied by any other provision of the Income Tax Acts shall not apply as respects a capital allowance or part of a capital allowance which is or is deemed to be all or part of a capital allowance for the relevant year and to which full effect has not been given in that year because there were no profits or gains chargeable for that year or there was an insufficiency of profits or gains chargeable for that year,

(c) section 392 shall not apply to the capital allowances or any part of such allowances for the relevant year, and

(d) the amount of any deduction given under this section shall not exceed the amount of the person's trading income from the trade of farming for the relevant year before any deduction allowed by virtue of this section.

(4) (a) A deduction shall not be allowed under this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1999.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of the trade of farming for an accounting period of a person other than a company shall not apply for any purpose of the Income Tax Acts for any year of assessment later than the year 1998-99.

(5) A person shall not be entitled to a deduction under this section for any chargeable period unless a written claim for such a deduction is made on or before the specified return date for that chargeable period.

(6) This section shall apply to a trade of farming carried on by a partnership as it applies to a trade of farming carried on by a person.

667 Special provisions for qualifying farmers. [FA94 Sch6; FA96 s135; FA97 s19]

667.— (1) In this section, “qualifying farmer” means an individual who—

(a) in the year 1993-94 or any subsequent year of assessment first qualifies for grant aid under the Scheme of Installation Aid for Young Farmers operated by the Department of Agriculture and Food under Council Regulation (EEC) No. 797/85 of 12 March 1985[^1] or that Regulation as may be revised from time to time, or

(b) (i) first becomes chargeable to income tax under Case I of Schedule D in respect of profits or gains from the trade of farming for the year 1993-94 or any subsequent year of assessment,

(ii) has not attained the age of 35 years at the commencement of the year of assessment referred to in subparagraph (i), and

(iii) at any time in the year of assessment so referred to—

(I) is the holder of a qualification set out in the Table to this section (in this subparagraph referred to as “the Table”) and, in the case of a qualification set out in subparagraph (c), (d), (e), (f) or (g) of paragraph 3, or in paragraph 4, of the Table, is also the holder of a certificate issued by Teagasc— The Agricultural and Food Development Authority (in this section referred to as “Teagasc”) certifying that such person has satisfactorily attended a course of training in farm management the aggregate duration of which exceeded 80 hours; but, where Teagasc certifies that any other qualification corresponds to a qualification set out in the Table, that other qualification shall for the purposes of this subsection be treated as if it were the corresponding qualification so set out,

(II) (A) has satisfactorily attended full-time a course at a third-level institution in any discipline for a period of not less than 2 years' duration, and

(B) is the holder of a certificate issued by Teagasc certifying satisfactory attendance at a course of training in either or both agriculture and horticulture the aggregate duration of which exceeded 180 hours,

or

(III) if born before the 1st day of January, 1968, is the holder of a certificate issued by Teagasc certifying that such person has satisfactorily attended a course of training in either or both agriculture and horticulture the aggregate duration of which exceeded 180 hours.

(2) In the case of a qualifying farmer—

(a) section 666 (1) shall apply as if “100 per cent” were substituted for “25 per cent”;

(b) paragraph (a) shall apply in computing a person's trading profits for an accounting period in the case of an individual who becomes a qualifying farmer—

(i) on or after the 6th day of April, 1993, and before the 6th day of April, 1995, for the year of assessment 1995-96 and for each of the 3 immediately succeeding years of assessment,

(ii) on or after the 6th day of April, 1995, and before the 6th day of April, 1997, for the year of assessment inwhich the individual becomes a qualifying farmer and for each of the 3 immediately succeeding years of assessment, or

(iii) on or after the 6th day of April, 1997, and before the 6th day of April, 1999, for the year of assessment in which the person becomes a qualifying farmer and for the immediately succeeding year of assessment.

TABLE

(a) Certificate in Farming;

(b) Diploma in Commercial Horticulture;

(c) Diploma in Amenity Horticulture;

(d) Diploma in Pig Production;

(e) Diploma in Poultry Production.

(a) Certificate in Farm Management;

(b) Certificate in Farm Husbandry;

(c) Trainee Farmer Certificate.

(a) Degree in Agricultural Science awarded by the National University of Ireland through the National University of Ireland, Dublin;

(b) Degree in Horticultural Science awarded by the National University of Ireland through the National University of Ireland, Dublin;

(c) Degree in Veterinary Science awarded by the National University of Ireland through the National University of Ireland, Dublin;

(d) Degree in Rural Science awarded by the National University of Ireland through the National University of Ireland, Cork or by the University of Limerick;

(e) Diploma in Rural Science awarded by the National University of Ireland through the National University of Ireland, Cork;

(f) Degree in Dairy Science awarded by the National University of Ireland through the National University of Ireland, Cork;

(g) Diploma in Dairy Science awarded by the National University of Ireland through the National University of Ireland, Cork.

(a) National Certificate in Agricultural Science studied through Kildalton Agricultural College and Waterford Regional Technical College;

(b) National Certificate in Business Studies (Agribusiness) studied through the Franciscan Brothers Agricultural College, Mountbellew, and Galway Regional Technical College.

668 Compulsory disposals of livestock. [FA96 s136]

668.— (1) In this section—

“excess” means the excess of the relevant amount over the value of the stock to which this section applies at the beginning of the accounting period in which the disposal takes place;

“relevant amount” means the amount of any income received by a person as a result or in consequence of a disposal of stock to which this section applies;

“stock to which this section applies” means all cattle forming part of the trading stock of the trade of farming, where such cattle are compulsorily disposed of on or after the 6th day of April, 1993, under any statute relating to the eradication or control of diseases in livestock, and for the purposes of this section all cattle shall be regarded as compulsorily disposed of where, in the case of any disease eradication scheme relating to the eradication or control of brucellosis in livestock, all eligible cattle for the purposes of any such scheme, together with such other cattle as are required to be disposed of, are disposed of.

(2) Where stock to which this section applies is disposed of in an accounting period by a person carrying on the trade of farming, the person may elect to have the excess treated in accordance with subsections (3) to (5), and such election shall be made in such form and contain such information as the Revenue Commissioners may require.

(3) (a) Notwithstanding any other provision of the Tax Acts apart from paragraph (b), where a person elects in accordance with subsection (2), the excess shall be disregarded as respects the accounting period in which it arises and shall instead be treated for the purposes of the Tax Acts as arising in equal instalments in each of the 2 immediately succeeding accounting periods.

(b) Notwithstanding paragraph (a), where the person further elects, the excess shall be treated as arising in such equal instalments in the accounting period in which it arises and in the immediately succeeding accounting period.

(4) Where, not later than the end of the succeeding accounting period or succeeding accounting periods, as appropriate, referred to in subsection (3), the person incurs expenditure on the replacement of cattle in an amount not less than the relevant amount, the person shall be deemed to be entitled to a deduction under section 666 in respect of the amount of the excess, that section being applied as if “100 per cent” were substituted for “25 per cent”; but, where the expenditure incurred on such replacement is less than the relevant amount, the deduction under section 666 in each of the 2 accounting periods referred to in paragraph (a) or (b) of subsection (3) shall be reduced to an amount that bears the same proportion to the excess as the expenditure incurred in those 2 accounting periods bears to the relevant amount.

(5) An election under this section shall be made by notice in writing made on or before the specified return date for the chargeable period in which the stock to which this section applies is compulsorily disposed of.

669 Supplementary provisions (Chapter 2). [FA96 s137]

669.— (1) (a) Where a person has acquired or disposed of trading stock otherwise than in the normal conduct of the trade of farming, the person shall be treated for the purposes of this Chapter as having, at the beginning or end of the relevant period of account, trading stock of such value as appears to the inspector (or on appeal to the Appeal Commissioners) to be just and reasonable having regard to all the circumstances of the case.

(b) Where the value of a person's trading stock at the beginning of a period of account is not calculated on the basis used for the calculation of the value of the trading stock at the end of that period, the value of the trading stock at the beginning of that period shall for the purposes of this Chapter be treated as being what it would have been if it had been calculated on that basis.

(2) (a) In any case where a person's accounting period does not coincide with a period of account or with 2 or more consecutive periods of account, the person's increase in stock value in the accounting period shall be determined for the purposes of section 666 not in accordance with subsection (1) of that section but by reference to a period (in this section referred to as “the reference period”) determined in accordance with this subsection.

(b) In any case where the beginning of a person's accounting period does not coincide with the beginning of a period of account, the reference period shall begin at the beginning of the period of account which is current at the beginning of the person's accounting period.

(c) In any case where the end of the person's accounting period does not coincide with the end of a period of account, the reference period shall end at the end of the period of account which is current at the end of the person's accounting period.

(d) In any case where paragraph (b) does not apply, the reference period shall begin at the beginning of the person's accounting period and, in any case where paragraph (c) does not apply, the reference period shall end at the end of the person's accounting period.

(3) (a) In any case where subsection (2)(a) applies, a person's increase in stock value in the accounting period shall be determined for the purposes of section 666 by the formula—

A (C O) _____ N

where—

A is the number of months in the person's accounting period,

C is the value of the person's trading stock at the end of the reference period,

O is the value of the person's trading stock at the beginning of the reference period, and

N is the number of months in the reference period.

(b) In any case where a person's increase in stock value in an accounting period is to be determined in accordance with paragraph (a), then, in section 666 and in subsections (4) to (6), any reference to the person's closing stock value shall be construed as a reference to the value of the person's trading stock at the end of the reference period.

(4) (a) A person shall not be entitled to a deduction under section 666 for an accounting period if that accounting period ends by virtue of the person ceasing to—

(i) carry on the trade of farming,

(ii) be resident in the State, or

(iii) be within the charge to tax under Case I of Schedule D in respect of that trade.

(b) In any case where a person's increase in stock value in an accounting period is to be determined in accordance with subsection (3)(a), paragraph (a) shall apply as if the reference in that paragraph to the person's accounting period were a reference to any of the accounting periods comprised in the person's reference period.

(5) (a) Subject to paragraphs (b) to (d), where a person claims a deduction under section 666 and, immediately before the beginning of an accounting period, the person was not carrying on the trade to which the claim relates, then, unless—

(i) the person acquired the initial trading stock of that trade on a sale or transfer from another person on that person's ceasing to carry on that trade, and

(ii) the stock so acquired is or is included in the person's trading stock as valued at the beginning of the accounting period,

the person shall be treated for the purposes of section 666 and subsections (1) to (4) as having at the beginning of the accounting period trading stock of such value as appears to the inspector to be just and reasonable.

(b) In determining for the purposes specified in paragraph (a) the value of trading stock to be attributed to a person at the beginning of the accounting period, the inspector shall have regard to all the relevant circumstances of the case and in particular to—

(i) movements during the person's accounting period in the costs of items of a kind comprised in the person's trading stock during that period, and

(ii) changes during that period in the volume of the trade in question carried on by the person.

(c) The Appeal Commissioners dealing with an appeal from the decision of an inspector on a claim in a case where in accordance with paragraph (a) the inspector has attributed to a person at the beginning of an accounting period trading stock of a particular value shall, in hearing and determining the appeal in so far as it relates to the value of the trading stock to be so attributed, determine such value as appears to the Appeal Commissioners to be just and reasonable, having regard to those factors to which the inspector is required to have regard by virtue of paragraph (b).

(d) In any case where subsection (2)(a) applies to a person's accounting period, for any reference in paragraphs (a) to (c) to that accounting period there shall be substituted a reference to the reference period.

(6) In any case where a person's accounting period or reference period consists of a number of complete months and a fraction of a month, any reference in this section to the number of months in the period shall be construed as including that fraction of a month (and in any case where any such period is less than one month any such reference shall be construed as a reference to that fraction of a month of which the period consists).

PART 24 Taxation of Profits of Certain Mines and Petroleum Taxation

CHAPTER 1 Taxation of profits of certain mines

670 Mine development allowance. [ITA67 s245; CTA76 s21(1) and Sch1 par10; FA80 s17(3); FA96 s132(2) and Sch5 PtII]

670.—(1) In this section—

“mine” means a mine operated for the purpose of obtaining, whether by underground or surface working, any scheduled mineral, mineral compound or mineral substance within the meaning of section 2 of the Minerals Development Act, 1940, but, in relation to capital expenditure incurred before the 6th day of April, 1960, “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 to such deposits, 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 nil or almost nil,

but as excluding references to—

(i) 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,

(ii) any expenditure on the acquisition of, or of rights over, the deposits, or

(iii) 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 be construed as including—

(a) 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 on which the expenditure was incurred,

(b) references to any part of such assets, and

(c) 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 the expenditure 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 mine may apply for an allowance (in this section referred to as a “mine development allowance”) in respect of that capital expenditure.

(4) Application for a mine development allowance for any chargeable period may be made to the inspector not later than 24 months after the end of that period.

(5) (a) Subject to paragraph (b), the following provisions shall apply in relation to the amount of a mine development allowance for any chargeable period in respect of any capital expenditure incurred in connection with a mine:

(i) the inspector shall estimate to the best of his or her judgment the life (in this subsection referred to as “the estimated life”) of the deposits, but shall not estimate such life at more than 20 years;

(ii) the inspector shall then estimate the amount of the difference (in this subsection referred to as “the estimated difference”) between the capital expenditure incurred in connection with the mine and the amount which in his or her opinion the assets representing that capital expenditure are likely to be worth at the end of the estimated life;

(iii) the inspector shall, subject to this section, allow as the mine development allowance for that chargeable period an amount equal to a sum which bears to the estimated difference the same proportion as the length of that chargeable period bears to the length of the estimated life;

(iv) if capital expenditure incurred in connection with the mine was incurred during that chargeable period, then, that chargeable period shall for the purposes of subparagraph (iii) be taken to comprise so much only of that chargeable period as is subsequent to the date on which the capital expenditure was incurred.

(b) The total of the mine development allowances shall not exceed the estimated difference.

(6) A mine development allowance to any person carrying on the trade of working a mine shall be made in taxing that trade, and section 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

(7) A mine development allowance shall not be made in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing that capital expenditure is an asset in respect of which an allowance may be made under section 284.

(8) Where a mine development allowance for any chargeable period has been made in respect of capital expenditure incurred in connection with a mine, then, for that chargeable period section 85 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 mine but before commencing such trade shall be treated for the purposes of this section as if it had been incurred on the first day of the commencement of such trade.

(10) Where mine development allowances in respect of any capital expenditure incurred in connection with a mine have been made and the mine has finally ceased to be operated, the following provisions shall apply:

(a) the inspector shall review the mine development allowances;

(b) if on such review it appears that the amount of the difference (in this subsection referred to as “the difference”) between the capital expenditure incurred in connection with the mine and the amount which the assets representing that capital expenditure at such cessation were worth at such cessation exceeds the total of the mine development allowances, then, further mine development allowances equal to the excess may be made for any chargeable period (being the chargeable period in which the mine has finally ceased to be operated or any previous chargeable period), but the total of such further mine development allowances shall not amount to more than the excess and if necessary effect may be given to this paragraph by means of repayment;

(c) if on such review it appears that the difference is less than the total of the mine development allowances, then, the deficiency or the total of the mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the 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 that trade) any asset representing capital expenditure incurred in connection with the mine and by reference to which mine development allowances have been made, the following provisions shall apply:

(a) if the total of the mine development allowances when added to the sum realised on the sale of that asset is less than that 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 chargeable period (being the chargeable period of such sale or any previous chargeable period), but the total of such further mine development allowances shall not exceed the unexhausted allowance;

(b) if the total of the mine development allowances when added to the sum realised on the sale of that asset exceeds that capital expenditure, then, the amount of such excess or the total of the mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade accruing immediately before the sale.

(12) Where—

(a) mine development allowances in respect of any capital expenditure incurred in connection with a mine have been made 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 that trade,

mine development allowances may continue to be made in respect of that 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 the original trader had continued to carry on that trade.

(13) Where for any chargeable period a company was entitled to relief from tax by virtue of Chapter II or Chapter III of Part XXV of the Income Tax Act, 1967, then, for the purposes of subsections (5) and (10) to (12), there shall be deemed to have been made for that chargeable period in respect of any expenditure the full mine development allowance which on due claim could have been made for that chargeable period in respect of that expenditure, unless that allowance has in fact been made.

(14) An appeal to the Appeal Commissioners shall lie on any question arising under this section in the like manner as an appeal would lie against an assessment, and the provisions of the Income Tax Acts relating to appeals shall apply accordingly.

671 Marginal coal mine allowance. [FA74 s74; CTA76 s140(1), s164, Sch2 PtI par48 and Sch3 PtII]

671.—(1) In this section, “marginal coal mine” means a coal mine in the State being worked for the purpose of the production of coal and in respect of which the Minister for the Marine and Natural Resources gives a certificate stating that that Minister is satisfied that the profits derived or to be derived from the working of that mine are such that, if tax is to be charged on those profits in accordance with the Income Tax Acts, other than this section, the mine is unlikely to continue to be worked.

(2) The Minister for Finance, after consultation with the Minister for the Marine and Natural Resources, may direct in respect of a marginal coal mine that for any particular year of assessment the tax chargeable on the profits of that mine shall be reduced to such amount (including nil) as may be specified by the Minister for Finance.

(3) Where a person is carrying on the trade of working a coal mine in respect of which the Minister for Finance gives a direction under subsection (2) in respect of a year of assessment, an allowance shall be made as a deduction in charging the profits of that trade to tax for that year of assessment of such amount as will ensure that the tax charged in respect of the profits of that trade shall equal the amount specified by that Minister.

(4) This section shall apply for corporation tax as it applies for income tax, and references to the Income Tax Acts, to years of assessment and to a deduction in charging the profits of a trade shall apply as if they were or included respectively references to the Corporation Tax Acts, to accounting periods and to a deduction made in computing the trading income for corporation tax.

672 Interpretation (sections 672 to 683). [F(TPCM)A74 s1(1), (2), (6) and (7); CTA76 s21(1) and Sch1 par63; FA96 s132(1) and Sch5 PtI par8]

672.—(1) In this section and in sections 673 to 683, except where otherwise provided or the context otherwise requires—

“development expenditure” means capital expenditure—

(a) on the development of a qualifying mine, or

(b) on the construction of any works in connection with a qualifying mine which are of such a nature that, when the mine ceases to be operated, they are likely to have so diminished in value that their value will be nil or almost nil,

and includes interest on money borrowed to meet such capital expenditure, but does not include expenditure on—

(i) the acquisition of the site of the mine or the site of any such works or of rights in or over any such site,

(ii) the acquisition of a scheduled mineral asset, or

(iii) 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;

“exploration expenditure” means capital expenditure on searching in the State for deposits of scheduled minerals or on testing such deposits or winning access to such deposits, and includes capital expenditure on systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals in those areas, but does not include expenditure on operations in the course of working a qualifying mine or expenditure which is development expenditure;

“mine development allowance” has the same meaning as in section 670;

“qualifying mine” means a mine being worked for the purpose of obtaining scheduled minerals;

“scheduled mineral asset” means a deposit of scheduled minerals or land comprising such a deposit or an interest in or right over such deposit or land;

“scheduled minerals” means minerals specified in the Table to this section occurring in non-bedded deposits of such minerals.

(2) Except where provided for in sections 674 to 676, expenditure shall not be regarded for the purposes of this section and sections 673 to 683 as having been incurred by a person carrying on the trade of working a qualifying mine in so far as the expenditure 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) The Minister for Finance may by regulations add minerals occurring in non-bedded deposits of such minerals to the Table to this section.

(4) Every regulation made under subsection (3) shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

TABLE

SCHEDULED MINERALS

Barytes

Felspar

Serpentinous marble

Quartz rock

Soapstone

Ores of copper

Ores of gold

Ores of iron

Ores of lead

Ores of manganese

Ores of molybdenum

Ores of silver

Ores of sulphur

Ores of zinc.

673 Allowance in respect of development expenditure and exploration expenditure. [F(TPCM)A74 s2(1) and (4); CTA76 s21(1) and Sch1 par64; FA90 s39(a)]

673.—(1) Subject to subsections (2) and (3), where a person carrying on the trade of working a qualifying mine incurs on or after the 6th day of April, 1974, any development expenditure or exploration expenditure and makes application under section 670 for a mine development allowance for a chargeable period in respect of such expenditure—

(a) that expenditure shall be deemed to be expenditure in respect of which that allowance may be granted, whether or not in the case of exploration expenditure a deposit of scheduled minerals is found as a result of the expenditure,

(b) the amount of such allowance for that chargeable period shall be equal to the total amount of—

(i) the exploration expenditure, and

(ii) in the case of development expenditure, the amount of the difference between that expenditure and the amount which in the opinion of the inspector the assets representing that expenditure are likely to be worth at the end of the estimated life of the qualifying mine, and

(c) in relation to a case in which this section has applied, any reference in the Tax Acts to an allowance made under section 670 shall be construed as including a reference to an allowance made under that section by virtue of this section.

(2) For the purposes of this section, no account shall be taken of exploration expenditure incurred before the 1st day of April, 1990, as a result of which a deposit of scheduled minerals is not found if the expenditure was incurred more than 10 years before the date on which the person carrying on the trade of working a qualifying mine commenced to carry on that trade.

(3) No allowance shall be made under subsection (1) in respect of expenditure incurred before the 6th day of April, 1974, whether or not such expenditure is by virtue of any provision of the Tax Acts deemed to have been incurred on or after that date.

674 Expenditure on abortive exploration. [F(TPCM)A74 s3(2) to (5); CTA76 s21(1) and Sch1 par65; FA90 s39(b)]

674.— (1) (a) Where a person who commences to carry on a trade of working a qualifying mine has incurred exploration expenditure and that expenditure was not incurred in connection with the qualifying mine, then, subject to paragraph (b), in taxing the trade for the chargeable period in which the person commences to carry on the trade, there shall be made an allowance of an amount equal to the amount of that expenditure.

(b) For the purposes of paragraph (a), no account shall be taken of exploration expenditure incurred before the 1st day of April, 1990, if the expenditure was incurred more than 10 years before the date on which the person commences to carry on the trade of working the qualifying mine.

(2) Where in a case referred to in subsection (1) the person concerned is a body corporate and there was or is, after all or part of the expenditure referred to in that subsection had been incurred by the body corporate, a change in ownership (within the meaning of Schedule 9) of the body corporate or of a body corporate that is a parent body or a wholly-owned subsidiary (within the meaning of section 675) of the first-mentioned body corporate, no allowance shall be made under this section in respect of any part of that expenditure incurred before the date of the change in ownership; but, in any case where part of the ordinary share capital of any body corporate is acquired by a Minister of the Government, such acquisition shall be disregarded in determining whether or not there was or is such a change in ownership.

(3) Where a person commences to carry on the trade of working a qualifying mine but has not incurred the exploration expenditure incurred in connection with that mine, no allowance shall be made under this section or by virtue of section 673 in respect of exploration expenditure incurred by that person before the date on which that person commences to carry on that trade.

(4) Subject to paragraphs 16 and 18 of Schedule 32, a person shall not be entitled to an allowance in respect of the same expenditure both under this section and under some other provision of the Tax Acts.

675 Exploration expenditure incurred by certain bodies corporate. [F(TPCM)A74 s4; CTA76 s21(1) and Sch1 par66; FA90 s39(c)]

675.—(1) Subject to subsection (2), where exploration expenditure, in respect of which an allowance may be claimed by virtue of section 673 or 674, or (as respects expenditure incurred on or after the 1st day of April, 1990) by virtue of section 673 as applied by section 679, is or has been incurred by a body corporate (in this section referred to as “the exploration company”) and—

(a) another body corporate is or is deemed to be a wholly-owned subsidiary of the exploration company, or

(b) the exploration company is or is deemed to be a wholly-owned subsidiary of another body corporate,

then, the expenditure or so much of it as the exploration company specifies—

(i) in the case referred to in paragraph (a), may at the election of the exploration company be deemed to have been incurred by such other body corporate (being a body corporate which is or is deemed to be a wholly-owned subsidiary of the exploration company) as the exploration company specifies,

(ii) in the case referred to in paragraph (b), may at the election of the exploration company be deemed to have been incurred by the body corporate (in this paragraph referred to as “the parent body”) of which the exploration company was, at the time the expenditure was incurred, a wholly-owned subsidiary or by such other body corporate (being a body corporate which is or is deemed to be a wholly-owned subsidiary of the parent body) as the exploration company specifies,

and, in a case where that expenditure was incurred on a date before the incorporation of the body corporate so specified, sections 672 to 683 shall apply in relation to the granting of any allowance in respect of that expenditure as if that body corporate had been in existence at the time the expenditure was incurred and had incurred the expenditure at that time.

(2) (a) The same expenditure shall not be taken into account in relation to more than one trade by virtue of this section.

(b) Subject to paragraphs 16 and 18 of Schedule 32, an allowance shall not be granted in respect of the same expenditure both by virtue of this section and under some other provision of the Tax Acts.

(3) A body corporate shall for the purposes of subsection (1) be deemed to be a wholly-owned subsidiary of another body corporate if and so long as all of its ordinary share capital is owned by that other body corporate, whether directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate; but, where part of the ordinary share capital of any body corporate is held by a Minister of the Government and the remainder of the ordinary share capital of that body corporate is held by another body corporate, the first-mentioned body corporate shall for the purposes of subsection (1) be deemed to be a wholly owned subsidiary of the last-mentioned body corporate.

(4) Subsections (5) to (10) of section 9 shall apply for the purpose of determining the amount of ordinary share capital held in a body corporate through other bodies corporate.

676 Expenditure incurred by person not engaged in trade of mining. [F(TPCM)A74 s5; CTA76 s21(1) and Sch1 par67]

676.—(1) Where—

(a) a person incurs exploration expenditure which results in the finding of a deposit of scheduled minerals, and

(b) without having carried on any trade which consists of or includes the working of that deposit and without any allowance or deduction under or by virtue of sections 672 to 683 having been made to the person in respect of that expenditure, the person sells any assets representing that expenditure to another person,

then, if that other person carries on such a trade in connection with that deposit, that other person shall for the purposes of sections 672 to 683 be deemed to have incurred, for the purposes of the trade and in connection with the deposit, exploration expenditure equal to the lesser of—

(i) the amount of the exploration expenditure represented by the assets, and

(ii) the price paid by that other person for the assets,

and that expenditure shall be deemed to have been incurred by that other person on the date on which that other person commences to carry on that trade.

(2) A person who by virtue of subsection (1) is deemed to have incurred an amount of exploration expenditure shall be deemed not to have incurred that amount of expenditure unless the working of the deposit results in the production of scheduled minerals in reasonable commercial quantities.

(3) Subject to paragraphs 16 and 18 of Schedule 32, a deduction or allowance in respect of the same expenditure shall not be made both under this section and under some other provision of the Tax Acts.

(4) Section 677 shall not apply to expenditure in respect of which an allowance is made by virtue of this section.

677 Investment allowance in respect of exploration expenditure. [F(TPCM)A74 s6; CTA76 s21(1) and Sch1 par68]

677.—(1) Where a person carrying on the trade of working a qualifying mine incurs on or after the 6th day of April, 1974, exploration expenditure in relation to which section 673 applies, there shall, in addition to any mine development allowance made in respect of such expenditure, be made to the person in taxing the trade for the chargeable period for which such mine development allowance is made an allowance (which shall be known as an “exploration investment allowance”) equal to 20 per cent of such expenditure, and section 670(6) shall apply to an exploration investment allowance as it applies to a mine development allowance.

(2) (a) No allowance shall be made under this section in respect of exploration expenditure—

(i) incurred before the 6th day of April, 1974, whether or not such expenditure is by virtue of any provision of the Tax Acts deemed to have been incurred on or after that date, or

(ii) which is deemed to be incurred by a person other than the person who incurred the expenditure.

(b) Paragraph (a) shall not apply in respect of expenditure deemed under section 675 to have been incurred by a body corporate other than the body corporate which incurred the expenditure.

678 Allowance for machinery and plant. [F(TPCM)A74 s7(1), (3) and (4); CTA76 s21 and Sch1 pars57, 58, 59 and 69; FA71 s22(3) and (4), s23, s24 and s25; FA97 s146(1) and Sch9 PtI par7(1)]

678.—(1) Where on or after the 6th day of April, 1974, new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) is provided for use for the purposes of the trade of working a qualifying mine, that machinery or plant shall, if it is not qualifying machinery or plant, be deemed for the purpose of section 285 to be qualifying machinery or plant.

(2) Where on or after the 6th day of April, 1974, a person carrying on the trade of working a qualifying mine incurs capital expenditure on the provision of new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) for the purposes of that trade, there shall be made to the person for the chargeable period related to the expenditure an allowance equal to 20 per cent of the expenditure, and such allowance shall be made in taxing the trade.

(3) For the purposes of ascertaining the amount of any allowance to be made to any person under section 284 in respect of expenditure incurred during a chargeable period on any qualifying machinery or plant, no account shall be taken of an allowance under subsection (2) in respect of that expenditure, and in section 284(4) “the allowances on that account” and “the allowances” where it occurs before “exceed” shall each be construed as not including a reference to any allowance made under subsection (2) to the person by whom the trade of working a qualifying mine is carried on.

(4) Where an allowance under subsection (2) has been made to any person in respect of expenditure incurred on the provision of qualifying machinery or plant and the machinery or plant is sold by that person without the machinery or plant having been used by that person for the purposes of the trade of working a qualifying mine or before the expiration of the period of 2 years from the day on which the machinery or plant began to be so used, the allowance shall be withdrawn and all such additional assessments and adjustments of assessments shall be made as may be necessary for or in consequence of the withdrawal of the allowance.

(5) For the purposes of this section—

(a) the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable,

(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority,

(c) any expenditure incurred for the purposes of a trade by a person about to carry on the trade shall be treated as if that expenditure had been incurred by that person on the first day on which that person carries on the trade,

(d) capital expenditure shall not include any expenditure which is allowed to be deducted in computing for the purposes of tax the profits or gains of a trade carried on by the person incurring the expenditure, and

(e) subsections (2) and (3) of section 306 shall apply in determining the chargeable period (being a year of assessment) for which an allowance is to be made under this section.

(6) For the purposes of the Income Tax Acts, any claim by a person for an allowance under this section in taxing the person's trade shall be included in the annual statement required to be delivered under those Acts of the profits or gains of the person's trade and shall be accompanied by a certificate signed by the claimant (which shall be deemed to form part of the claim) stating that the expenditure was incurred on the provision of qualifying machinery or plant and giving such particulars as show that the allowance is to be made.

(7) Section 304(4) shall apply in relation to an allowance under subsection (2) as it applies in relation to allowances to be made under Part 9.

679 Exploration expenditure. [F(TPCM)A 74 s7A; FA90 s39(d)]

679.—(1) (a) In this section—

“exploration company” means a company, the business of which for the time being consists primarily of exploring for scheduled minerals;

“exploring for scheduled minerals” means searching in the State for deposits of scheduled minerals or testing such deposits or winning access to such deposits, and includes the systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals within those areas, but does not include operations which are operations in the course of developing or working a qualifying mine.

(b) This section shall apply as respects expenditure incurred on or after the 1st day of April, 1990.

(2) Subject to subsections (3) to (5), for as long as a company—

(a) is an exploration company,

(b) does not carry on a trade of working a qualifying mine, and

(c) incurs capital expenditure (including such expenditure incurred on the provision of plant and machinery) for the purposes of exploring for scheduled minerals,

the company shall be deemed for the purposes of sections 673, 674(3), 677 and 678 and the other provisions of the Tax Acts, apart from section 672, subsections (1), (2) and (4) of section 674 and sections 675, 676, 680, 681, 682 and 683—

(i) to be carrying on a trade of working a qualifying mine,

(ii) to come within the charge to corporation tax in respect of that trade when it first incurs the capital expenditure referred to in paragraph (c), and

(iii) to incur for the purposes of that trade that expenditure incurred on the provision of plant and machinery,

so that all allowances or charges to be made for an accounting period by virtue of this subsection and section 673, 677 or 678 shall be given effect by treating the amount of any allowance as a trading expense of that trade in the period and by treating the amount on which any such charge is to be made as a trading receipt of that trade in the period.

(3) Where by virtue of subsection (2) a company is to be treated as incurring a loss in a trade in an accounting period, the company—

(a) shall be entitled to relief in respect of the loss under section 157, subsections (1) to (3) of section 396 and subsections (1) and (2) of section 397 as if for “trading income from the trade” or “trading income”, wherever occurring in sections 396 and 397, there were substituted “profits (of whatever description)”, and

(b) subject to subsection (4)(b)(ii), shall not otherwise be entitled to relief in respect of the loss or to surrender relief under section 420(1) in respect of the loss.

(4) (a) Any asset representing exploration expenditure in respect of which an allowance or deduction has been made to a company by virtue of subsection (2) and section 673 shall for the purposes of section 670(11) be treated as an asset representing capital expenditure incurred in connection with the mine which the company is deemed to be working by virtue of subsection (2), and the company shall not cease to be deemed to be carrying on the trade of working that mine, so as to be within the charge to corporation tax in respect of that trade, before any sale of such an asset in the event of such a sale.

(b) Subject to paragraph (c), where a company begins at any time (in this paragraph and in paragraph (c) referred to as “the relevant time”) to carry on a trade of working a qualifying mine and accordingly ceases to be deemed to carry on such a trade, the company shall be treated as carrying on the same trade before and after that time for the purposes of—

(i) any allowance, charge or trade receipt treated as arising by reference to any capital expenditure incurred before the relevant time, and

(ii) relief, other than by virtue of subsection (3), under section 396(1) for any losses arising before the relevant time, in so far as relief has not already been given for those losses by virtue of this section.

(c) Paragraph (b) shall not apply where there is a change in the ownership of the company within a period of—

(i) 12 months ending at the relevant time, or

(ii) 24 months beginning at the relevant time.

(d) Schedule 9 shall apply for the purposes of supplementing this subsection.