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13 1986

FINANCE ACT, 1986

Chapter II

Taxation of Farming Profits

Farming: amendment of provisions relating to relief in respect of increase in stock values.

15. —(1) Section 31A (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , is hereby amended by the substitution of “1986” for “1985” (inserted by the Finance Act, 1985 )—

(a) in paragraph (iv) (inserted by the Finance Act, 1979 ) of the proviso to subsection (4) (a), and

(b) in each place where it occurs in subsections (7) and (9) (inserted by the Finance Act, 1984 ),

and the said paragraph (iv), the said subsection (7) (apart from the proviso) and the said subsection (9) (apart from the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(iv) a deduction shall not be allowed under the provisions of this section in computing a company's trading income for any accounting period which ends on or after the 6th day of April, 1986.

(7) Where in relation to an accounting period a company's opening stock value exceeds its closing stock value, the amount of the excess (in this section referred to as the company's “decrease in stock value”) shall, if the accounting period ends on a date before the 6th day of April, 1986, be treated in the computation of the company's trading income for the purposes of corporation tax, as a trading receipt of the company's trade for that accounting period:

(9) In the computation of a company's trading income for the purposes of corporation tax for any accounting period which ends on or after the 6th day of April, 1986, in which there is a decrease in stock value, there shall be treated as a trading receipt of the company's trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the company's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1986,

B is the aggregate amount of the company's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1986, and

C is the aggregate of the amounts which under this subsection are treated as trading receipts of the company's trade for preceding accounting periods:

(2) Section 12 of the Finance Act, 1976 , is hereby amended—

(a) by the substitution in subsection (3) of “1986-87” for “1985-86” (inserted by the Finance Act, 1985 ), and

(b) by the substitution of “1986” for “1985” (inserted by the Finance Act, 1985 ) in each place where it occurs in subsections (5) and (6) (inserted by the Finance Act, 1984 ),

and the said subsection (3), the said subsection (5) (apart from the proviso) and the said subsection (6) (apart from the proviso), as so amended, are set out in the Table to this subsection.

TABLE

(3) Any deduction allowed by virtue of this section in computing a person's trading profits for an accounting period shall not have effect for any purpose of the Income Tax Acts for any year of assessment prior to the year 1974-75 or later than the year 1986-87.

(5) In the computation of a person's trading profits for an accounting period in which there is a decrease in stock value and which ends on a date in the period from the 6th day of April, 1976, to the 5th day of April, 1986, the amount of that decrease shall be treated as a trading receipt of the trade for that accounting period:

(6) In the computation of a person's trading profits for any accounting period in which there is a decrease in stock value and which ends on or after the 6th day of April, 1986, there shall be treated as a trading receipt of the trade for that accounting period the amount (if any) by which A exceeds the aggregate of B and C

where—

A is the aggregate amount of the person's decreases in stock value in all accounting periods which ended on or after the 6th day of April, 1986,

B is the aggregate amount of the person's increases in stock value in all accounting periods which ended on or after the 6th day of April, 1986, and

C is the aggregate of the amounts which are treated as trading receipts of the person's trade for preceding accounting periods which ended on or after the 6th day of April, 1986:

(3) This section shall have effect only as respects a trade of farming.

Credit for farm tax.

16. —(1) Subject to the following provisions of this section, where, for the year 1986-87 or any subsequent year of assessment, an individual is chargeable to income tax in respect of profits or gains from farming and on any date within that year of assessment he is liable, in accordance with the provisions of section 9 of the Farm Tax Act, 1985 , for the payment of farm tax in respect of a taxable farm, the amount of income tax so chargeable shall be reduced by—

(a) where paragraph (a) of subsection (2) of the said section 9 applies, the amount of farm tax paid by him in that year of assessment in accordance with the provisions of that paragraph,

(b) where paragraph (b) of the said subsection (2) applies—

(i) if each person jointly and severally liable for payment of the farm tax under that paragraph pays his separate share of the farm tax, the amount of farm tax so paid by him in that year of assessment,

(ii) if each person so liable for payment does not pay his separate share of that farm tax, such portion of the total farm tax payable under that paragraph as may reasonably be regarded as borne by him in that year of assessment, and

(c) where paragraph (c) of the said subsection (2) applies—

(i) if each person jointly and severally liable under that paragraph for payment of the farm tax in respect of so much of the farm as is not apportioned under section 3 (2) of the said Act pays his separate share of that farm tax, the amount of that farm tax so paid by him in that year of assessment,

(ii) if each person so liable for payment of such farm tax does not pay his separate share of that farm tax, such portion of the total farm tax payable under that paragraph in respect of so much of the farm as is not so apportioned as may reasonably be regarded as borne by him:

Provided that—

(a) the amount of the reduction granted for any year of assessment under this subsection shall not exceed—

(i) the amount of the farm tax payable by the individual for the calendar year ending in the year of assessment, and

(ii) the tax appropriate to the profits or gains from farming in relation to the said individual for that year of assessment, and

(b) in determining the income chargeable to income tax for any year of assessment no sum shall be deducted in respect of farm tax.

(2) Subsection (1) shall apply in the case of a husband who is chargeable to tax in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , as if references to profits or gains from farming included any such profits or gains of his wife and references to farm tax paid or payable included references to farm tax paid or payable by his wife.

(3) For the purposes of subsection (1) the tax appropriate to the profits or gains from farming in relation to an individual for a year of assessment shall be determined in accordance with the Third Schedule .

(4) In this section “farm tax” and “taxable farm” have the meanings respectively assigned to them by section 1 (1) of the Farm Tax Act, 1985 .