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Income Tax Act 2007 (c. 3) Laws UK
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Income Tax Act 2007 (c. 3)

(The document as of February, 2008)

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(a) after "Chapter 3 of Part 7 of the Taxes Act" insert "or relief under Part 5 of ITA 2007",

(b) for "that Act" substitute "the Taxes Act or section 245 of ITA 2007", and

(c) after "that Chapter" insert "or relief under that Part".

(4) After subsection (8) insert--

" (9) In this section references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007. "

307 In section 108(1)(a) (identification of relevant securities) for "section 710 of the Taxes Act" substitute "Chapter 2 of Part 12 of ITA 2007 (accrued income profits)".

308 (1) Amend section 119 (transfer of securities subject to the accrued income scheme) as follows.

(2) For subsections (1) to (5) substitute--

" (1) Where there is a transfer of securities within the meaning of Chapter 2 of Part 12 of ITA 2007 (accrued income profits)--

(a) if a payment is treated as made to the transferor under section 632 of that Act or by the transferor under section 633 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned;

(b) if a payment is treated as made by the transferee under section 632 of that Act or to the transferee under section 633 of that Act, section 39 shall be disregarded in computing the gain accruing to the transferee if he disposes of the securities;

but subsections (2) and (3) below shall apply.

(2) Where the securities are transferred with accrued interest (within the meaning of that Chapter)--

(a) if a payment is treated as made to the transferor under section 632 of ITA 2007, an amount equal to the amount of that payment shall be excluded from the consideration mentioned in subsection (8) below;

(b) if a payment is treated as made by the transferee under that section, an amount equal to the amount of that payment shall be excluded from the sums mentioned in subsection (9) below.

(3) Where the securities are transferred without accrued interest (within the meaning of that Chapter)--

(a) if a payment is treated as made by the transferor under section 633 of ITA 2007, an amount equal to the amount of that payment shall be added to the consideration mentioned in subsection (8) below;

(b) if a payment is treated as made to the transferee under that section, an amount equal to the amount of that payment shall be added to the sums mentioned in subsection (9) below.

(3A) Subsections (3B) and (3C) below apply where there is a transfer of variable rate securities (within the meaning of that Chapter) and--

(a) the transferor is treated as making accrued income profits under section 630(2) of ITA 2007, or

(b) a payment is treated as made to the transferor under section 635 of that Act.

(3B) Section 37 shall be disregarded in computing the gain accruing on the disposal concerned.

(3C) An amount equal to the amount of the profits or payment shall be excluded from the consideration mentioned in subsection (8) below.

(4) Where there is a transfer of securities with unrealised interest (within the meaning of Chapter 2 of Part 12 of ITA 2007)--

(a) if section 630 of that Act applies or a payment is treated as made to the transferor under section 634 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the consideration mentioned in subsection (8) below;

(b) if section 681 of that Act applies, section 39 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the sums mentioned in subsection (9) below.

(5) In subsection (4) above "the relevant amount" means an amount equal to--

(a) if paragraph (b) below does not apply, the amount of the unrealised interest in question (within the meaning of Chapter 2 of Part 12 of ITA 2007);

(b) if section 660 of that Act applies--

(i) in a case falling within subsection (4)(a) above, the amount taken, by virtue of section 660 or 661 of that Act (as the case may be), to be the unrealised interest value for the purposes of section 660(2) or (3) of that Act;

(ii) in a case falling within subsection (4)(b) above, the amount of income that is exempt from liability to income tax under section 681 of that Act. "

(3) In subsection (6) for the words from "as if" to the end substitute "as if for "is treated as made", in each place where it occurs, there were substituted "would, if the disposal were a transfer, be treated as made"."

(4) For subsection (7) substitute--

" (7) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, a payment would be treated as made under section 632 or 633 of that Act, the securities shall be treated--

(a) for the purposes of subsection (6) above, as transferred on the day of the disposal, and

(b) for the purposes of subsections (2) and (3) above, as transferred with accrued interest if, had the disposal been a transfer within the meaning of that Chapter, it would have been a transfer with accrued interest and as transferred without accrued interest if, had the disposal been such a transfer, it would have been a transfer without accrued interest.

(7A) In relation to any securities which by virtue of subsection (7B) below are treated for the purposes of this subsection as having been transferred, subsection (3A) above shall have effect as if--

(a) for "is treated as making" there were substituted "would, if the disposal were a transfer, be treated as making", and

(b) for "is treated as made" there were substituted "would, if the disposal were a transfer, be treated as made".

(7B) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, the transferor would be treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities or a payment would be treated as made under section 635 of that Act--

(a) the securities shall be treated, for the purposes of subsection (7A) above, as transferred on the day of the disposal, and

(b) the transfer shall be treated, for the purposes of subsection (3A) above, as a transfer of variable rate securities. "

(5) In subsection (10) for the words from "a person is treated", in the first place where it occurs, to "(determined under that section)", in the first place it occurs, substitute "a payment is treated as made to a person under section 632 or 635 of ITA 2007, or a person is treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities, an amount equal to the amount of the payment or profits".

(6) In the full-out words of subsection (10) for the words from "a person is treated" to "(determined under that section)" substitute "a payment is treated as made by a person under section 633 of that Act an amount equal to the amount of the payment".

309 After section 125 insert--



" Share loss relief
125A Effect of share loss relief

(1) If loss relief under section 573 of the Taxes Act or Chapter 6 of Part 4 of ITA 2007 ("share loss relief") is obtained in respect of a loss or any part of a loss, no deduction is to be made in respect of the loss or (as the case may be) the part under this Act.

(2) If a claim is made for share loss relief in respect of a loss accruing on the disposal of shares, section 30 has effect in relation to the disposal as if for the references in subsections (1)(b) and (5) to a tax-free benefit there were substituted references to any benefit whether tax-free or not.

(3) All such adjustments of corporation tax on chargeable gains or capital gains tax are to be made, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of--

(a) share loss relief being obtained in respect of an allowable loss, or

(b) such relief not being obtained in respect of the whole or part of such a loss in respect of which a claim is made. "

310 In section 148C(1) (deemed disposals at a loss under section 564(4) of ITTOIA 2005) for "section 392 of ICTA" substitute "section 152 of ITA 2007".

311 (1) Amend section 150A (enterprise investment schemes) as follows.

(2) In subsection (2) after "section 312 (1A)(a) of the Taxes Act" insert "or section 159(2) of ITA 2007".

(3) In subsection (3) for paragraphs (a), (aa) and (b) substitute--

" (a) an individual's liability to income tax has been reduced (or treated by virtue of section 304 of the Taxes Act or section 245 of ITA 2007 (spouses and civil partners) as reduced) for any year of assessment under section 289A of the Taxes Act or section 158 of ITA 2007 in respect of any issue of shares,

(b) the amount of the reduction ("A") is less than the amount ("B") which is equal to tax at the savings rate for that year on the amount subscribed for the issue, and

(c) A is not found under section 289A(2)(b) of the Taxes Act or (as the case may require) is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007, " .

(4) In subsection (4) after "the Taxes Act" insert "or as provided by section 246 of ITA 2007".

(5) In subsection (8B) for the words from "subsection (2)" to the end substitute "section 306(2) of the Taxes Act or section 203(1) of ITA 2007 and in accordance with section 306 of the Taxes Act or sections 204 and 205 of ITA 2007".

(6) In subsection (8C) after "Taxes Act" insert "or section 159(2) of ITA 2007".

(7) In subsection (8D)--

(a) after "section 304A of the Taxes Act" insert "or section 247 of ITA 2007", and

(b) for paragraph (b) substitute--

" (b) the following--

(i) subsections (2)(b), (3) and (4) of section 304A of the Taxes Act and subsection (5) of that section so far as relating to section 306(2) of that Act, or

(ii) sections 247(3)(b), 248(2)(a) and 249 of ITA 2007,

shall apply for the purposes of this section as they apply for the purposes of Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007. "

(8) In subsection (10A) for "the same meaning as in the Taxes Act" substitute "the meaning given in section 989 of ITA 2007".

(9) In subsection (11)--

(a) after "Taxes Act" insert "or Part 5 of ITA 2007", and

(b) after "that Chapter" insert "or means shares that meet the requirements of section 173(2) of ITA 2007".

(10) After subsection (12) insert--

" (13) References in this section to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007. "

312 (1) Amend section 150B (enterprise investment scheme: reduction of relief) as follows.

(2) In subsection (1)--

(a) after "section 300(1A)(a) of the Taxes Act" insert "or section 213(2)(a) of ITA 2007", and

(b) for "that Act" substitute "the Taxes Act or section 224(2)(a) of ITA 2007".

(3) In subsection (6) for "Subsections (11) and (12)" substitute "Subsections (11) to (13)".

313 In section 150D (enterprise investment scheme: application of taper relief) after "or" insert "relief under" and after "Taxes Act" insert "or Part 5 of ITA 2007,".

314 In section 151A(7) (venture capital trusts: reliefs) for "the meaning of the Taxes Act" substitute "the meaning given in section 989 of ITA 2007".

315 (1) Amend section 151B (VCTs: supplementary) as follows.

(2) In subsection (3)--

(a) in paragraph (a) for "been given" substitute "obtained" and for "Part 1 of Schedule 15B to the Taxes Act" substitute "Chapter 2 of Part 6 of ITA 2007", and

(b) in paragraphs (b) and (c) for "been given" substitute "obtained" and for "that Part of that Schedule" substitute "that Chapter of that Part".

(3) In subsection (6)(b) for "section 842AA(8) of the Taxes Act" substitute "section 281(3) of ITA 2007".

(4) In subsection (8)(b) for "given" substitute "obtained" and for "Part 1 of Schedule 15B to the Taxes Act" substitute "Chapter 2 of Part 6 of ITA 2007".

316 After section 151B insert--

" 151BA CITR: identification of securities or shares on a disposal

(1) This section applies for the purpose of identifying the securities or shares disposed of in any case where--

(a) an individual or company ("the investor") disposes of part of a holding of securities or shares ("the holding"), and

(b) the holding includes securities or shares to which CITR is attributable in respect of one or more years of assessment or accounting periods that have been held by the investor continuously from the time they were issued until the disposal.

(2) Any disposal by the investor of securities or shares included in the holding which have been acquired by the investor on different days is treated as relating to those acquired on an earlier day rather than to those acquired on a later day.

(3) If there is a disposal by the investor of securities or shares included in the holding which have been acquired by the investor on the same day, any of those securities or shares--

(a) to which CITR is attributable, and

(b) which have been held by the investor continuously from the time they were issued until the time of disposal,

are treated as disposed of after any other securities or shares included in the holding which were acquired by the investor on that day.

(4) For the purposes of this section a holding of securities is any number of securities of a company which--

(a) carry the same rights,

(b) were issued under the same terms, and

(c) are held by the investor in the same capacity.

It does not matter for this purpose that the number of the securities grows or diminishes as securities carrying those rights and issued under those terms are acquired or disposed of.

(5) For the purposes of this section a holding of shares is any number of shares in a company which--

(a) are of the same class, and

(b) are held by the investor in the same capacity.

It does not matter for this purpose that the number of the shares grows or diminishes as shares of that class are acquired or disposed of.

(6) Chapter 1 of Part 4 (share pooling, etc) has effect subject to this section.

(7) Sections 104 to 107 (which make provision for the identification of securities and shares on a disposal) do not apply to securities or shares to which CITR is attributable.

(8) In a case to which section 127 (equation of original shares and new holding) applies, shares included in the new holding are treated for the purposes of subsections (2) and (3) as acquired when the original shares were acquired.

(9) In subsection (8)--

(a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and

(b) "original shares" and "new holding" have the same meaning as in section 127, or (as the case may be) that section as applied by virtue of the enactment in question.

(10) In this section and sections 151BB and 151BC--

(a) if the investor is an individual--

(i) "CITR" has the meaning given by section 333 of ITA 2007,

(ii) references to CITR being attributable to securities, shares or debentures are to be read in accordance with section 357 of that Act, and

(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with section 380 of that Act,

(b) if the investor is a company--

(i) "CITR" means relief under Part 5 of Schedule 16 to the Finance Act 2002,

(ii) references to CITR being so attributable are to be read in accordance with paragraph 26 of that Schedule, and

(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with paragraph 49 of that Schedule. "

317 After section 151BA insert--

" 151BB CITR: rights issues etc

(1) If--

(a) an individual or company ("the investor") holds shares in the CDFI which are of the same class and held in the same capacity ("the existing holding"),

(b) there is a reorganisation affecting the existing holding as a result of an allotment which--

(i) falls within section 126(2)(a) (an allotment of shares or debentures in respect of and in proportion to an original holding), and

(ii) is not an allotment of corresponding bonus shares,

(c) immediately after the reorganisation, CITR is attributable to the shares included in the existing holding or the shares or debentures allotted in respect of those shares, in respect of one or more years of assessment or accounting periods, and

(d) if CITR is attributable to the shares included in the existing holding at that time, those shares have been held by the investor continuously from the time they were issued until the reorganisation,

sections 127 to 130 (treatment of share capital following a reorganisation) do not apply in relation to the existing holding.

(2) Section 116(10) (reorganisations, conversions and reconstructions) does not apply in any case where the old asset consists of shares held (in the same capacity) by the investor--

(a) that have been held by the investor continuously from the time they were issued until the relevant transaction, and

(b) to which CITR is attributable immediately before that transaction.

In this subsection "old asset" and "the relevant transaction" have the meaning given by section 116.

(3) For the purposes of subsection (1)--

  • "corresponding bonus shares" means bonus shares that--

    (a)

    are issued in respect of shares included in the existing holding, and

    (b)

    are in the same company, are of the same class, and carry the same rights as, those shares,

  • "reorganisation" has the meaning given in section 126.

(4) The following provisions of this Act have effect subject to this section--

  • section 116 (reorganisations, conversions and reconstructions);

  • Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).

(5) In this section "the CDFI" is to be read--

(a) if the investor is an individual, in accordance with section 334(2) of ITA 2007,

(b) if the investor is a company, in accordance with paragraph 1(2) of Schedule 16 to the Finance Act 2002. "

318 After section 151BB insert--

" 151BC CITR: company reconstructions etc

(1) If--

(a) an individual or company ("the investor") holds shares in or debentures of a company ("company A"),

(b) there is a reconstruction or amalgamation affecting that holding ("the existing holding"),

(c) immediately before the reconstruction or amalgamation, CITR is attributable to the shares or debentures included in the existing holding in respect of one or more years of assessment or accounting periods, and

(d) the shares or debentures included in the existing holding have been held by the investor continuously from the time they were issued until the reconstruction or amalgamation,

sections 135 and 136 (share exchanges and company reconstructions) do not apply in respect of the existing holding.

(2) Subsection (1)(a) applies only if the shares or debentures are held by the investor in the same capacity.

(3) For the purposes of subsection (1) a "reconstruction or amalgamation" means an issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.

(4) The following provisions of this Act have effect subject to this section--

  • section 116 (reorganisations, conversions and reconstructions),

  • Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).

(5) The investor is treated as disposing of any securities or shares which but for subsection (1) the investor--

(a) would be treated as exchanging for other securities or shares by virtue of section 136, or

(b) would be so treated but for section 137(1) (which restricts section 136 to genuine reconstructions). "

319 In section 151C(5) (strips: manipulation of price: associated payment giving rise to loss) for "section 709(1)" substitute "section 840ZA".

320 In section 151D(5) (corporate strips: manipulation of price: associated payment giving rise to loss) for "section 709(1)" substitute "section 840ZA".

321 In section 161 (stock in trade: appropriations to and from stock) after subsection (4) insert--

" (5) If--

(a) any person is charged to income tax under section 755 of ITA 2007 (charge to tax from transactions in land) on the realisation of a gain because the condition in section 756(3)(d) is met, and

(b) the gain is calculated on the basis that any property was appropriated as trading stock,

the property shall be treated on that basis also for the purposes of this section. "

322 In section 169D(1) (gifts to settlor-interested settlements: exceptions) for "691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)" substitute "508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property)".

323 In section 226B(1) (private residence relief: special cases) for "691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)" substitute "508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property)".

324 In section 231(1) and (3) (shares: special provision) after "Taxes Act" insert "or Part 5 of ITA 2007".

325 In section 241(3)(a) (furnished holiday lettings) for the words from "the Taxes Act)" to "that Act)" substitute "the Income Tax Acts), or any Schedule A business (within the meaning of the Taxes Act)".

326 (1) Amend section 256 (charities) as follows.

(2) In subsection (1) for the words "subsection (2) below" substitute "the following provisions of this section".

(3) After subsection (2) insert--

" (3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

(4) Gains accruing to the charitable trust in the year of assessment are treated as being, and always having been, chargeable gains so far as they are attributed under section 256A to the non-exempt amount.

(5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act. "

327 After section 256 insert--

" 256A Attributing gains to the non-exempt amount

(1) This section applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

(2) Attributable gains of the charitable trust for the year of assessment may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.

(3) The non-exempt amount can be used up (in whole or in part) by--

(a) attributable gains being attributed to it under this section, or

(b) attributable income being attributed to it under section 541 of ITA 2007.

(4) The whole of the non-exempt amount must be used up by--

(a) attributable gains being attributed to the whole of it under this section,

(b) attributable income being attributed to the whole of it under section 541 of ITA 2007, or

(c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 541 of ITA 2007.

(5) See section 256B for the way in which gains are to be attributed to the non-exempt amount under this section.

(6) In this section and section 256B a charitable trust's "attributable income", and "attributable gains", for a tax year have the same meaning as in Part 10 of ITA 2007 (see section 540 of that Act).

256B How gains are attributed to the non-exempt amount

(1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256A.

(2) The trustees of the charitable trust may specify the attributable gains that are to be attributed to the non-exempt amount.

(3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.

(4) Subsection (6) applies if--

(a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and

(b) the trustees have not given notice under subsection (3) of the specification before the end of the required period.

(5) The required period is 30 days beginning with the day on which the officer made the requirement.

(6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount. "

328 In section 257 (gifts to charities etc) after subsection (2) insert--

" (2A) Subsection (2B) applies if relief is available under Chapter 3 of Part 8 of ITA 2007 or section 587B of the Taxes Act (gifts of shares, securities and real property to charities) in relation to the disposal of a qualifying investment to a charity (whether or not a claim for relief is actually made).

(2B) The consideration for which the charity's acquisition of the qualifying investment is treated by virtue of subsection (2) above as having been made--

(a) is reduced by the relievable amount if relief in relation to the disposal is available only under Chapter 3 of Part 8 of ITA 2007,

(b) is reduced by the relevant amount if relief in relation to the disposal is available only under section 587B of the Taxes Act,

(c) is reduced by the relievable amount if relief in relation to the disposal is available both under that Chapter and that section as a result of section 442 of ITA 2007 and section 587BA of the Taxes Act, or

(d) is reduced to nil if that consideration is less than the amount referred to in paragraph (a), (b) or (c) (as the case may be).

(2C) In subsections (2A) and (2B)--

  • "qualifying investment" has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 432 of that Act),

  • "relevant amount" has the same meaning as in section 587B of the Taxes Act, and

  • "relievable amount" has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 434 of that Act). "

329 After section 261A insert--



" Deduction of trading losses or post-cessation expenditure etc
261B Treating trade loss etc as CGT loss

(1) A person may make a claim under this section if--

(a) relief is available to the person under section 64 or 128 of ITA 2007 (trade or employment loss relief against general income) for a tax year in relation to an amount of loss, and

(b) the person makes a claim under that section for the amount to be deducted in calculating the person's net income for the tax year.

(2) A person may also make a claim under this section if--

(a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount of loss, but

(b) the person's total income for the tax year is nil or does not include any income from which the amount can be deducted.

(3) A claim under this section is for determining so much of the amount of the loss ("the relevant amount") as--

(a) is not deducted in calculating the person's net income for the tax year, and

(b) has not already been taken into account for the purposes of any relief for any other tax year or any year of assessment (whether under ITA 2007, this section or otherwise).

(4) When the relevant amount can no longer be varied--

(a) by the Commissioners on appeal, or

(b) on the order of a court,

it is treated for the purposes of capital gains tax as an allowable loss accruing to the person in the year of assessment corresponding to the tax year.

(5) But so much of the relevant amount as exceeds the maximum amount (see section 261C) is not to be treated for the purposes of capital gains tax as an allowable loss.

(6) The excess may, however, be used in giving effect to any other loss relief under Part 4 of ITA 2007 (depending on the terms of the relief).

(7) The amount treated as an allowable loss under this section--

(a) is no longer to be regarded as an amount available for income tax relief, and

(b) is not to be deductible from chargeable gains accruing to a person in any year of assessment that begins after the person has permanently ceased to carry on the trade, profession, vocation, employment or office in which the loss was made.

(8) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the loss was made in the trade, profession, vocation, employment or office.

(9) In this section "normal self-assessment filing date", "tax year" and "total income" have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).

261C Meaning of "the maximum amount" for purposes of section 261B

(1) For the purposes of section 261B "the maximum amount" is the amount on which the person would be chargeable to capital gains tax for the year of assessment if--

(a) the provisions mentioned below were ignored, and

(b) no account were taken of the event mentioned below.

(2) The provisions are--

(a) section 2A (taper relief),

(b) section 3(1) (annual exempt amount), and

(c) section 261B.

(3) The event is any event--

(a) which occurs after the date on which the relevant amount (see section 261B(3)) can no longer be varied by the Commissioners on appeal or on the order of a court, and

(b) in consequence of which the amount chargeable to capital gains tax is reduced as a result of an enactment relating to capital gains tax.

261D Treating excess post-cessation trade or property relief as CGT loss

(1) A person may make a claim under this section if--

(a) relief is available to the person under section 96 or 125 of ITA 2007 (post-cessation trade or property relief) for a tax year in relation to an amount, and

(b) the person makes a claim under that section to deduct the amount in calculating the person's net income for the tax year.

(2) A person may also make a claim under this section if--

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