PART V.

Shipping Investment Allowances: Income Tax, Sur-tax and Corporation Profits Tax.

17. —(1) Where, on or after the 6th day of April, 1957, a person carrying on a trade incurs capital expenditure on the purchase of a new ship for the purposes of the trade, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this Part of this Act referred to as a shipping investment allowance) equal to two-fifths of the expenditure, and such allowance shall be made as a deduction in charging the profits or gains of the trade and shall be in substitution for and not in addition to an initial allowance under Part V of the Finance Act, 1956 (No. 22 of 1956).

(2) For the purposes of this Part of this Act, the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable.

(3) Any claim by a person for an allowance under this section in charging the profits or gains of his trade shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains thereof 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 purchase of a new ship and giving such particulars as show that the allowance falls to be made.

(4) In this section and the subsequent sections of this Part of this Act “new” means unused and not secondhand.

18. —(1) For the purposes of ascertaining the amount of any deduction to be allowed to any person under paragraph (1) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, as amended by section 24 of the Finance Act, 1956 (No. 22 of 1956), as representing the diminished value by reason of wear and tear during the year of assessment of any ship, no account shall be taken of a shipping investment allowance in determining the value of the ship at the commencement of the year.

(2) In paragraph (6) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, the expression “the deductions allowed on that account for any previous years to the person by whom the trade is carried on”, and the expression “the deductions” where that expression occurs before the word “exceed”, shall each be construed as not including a reference to any shipping investment allowance made to the person by whom the trade is carried on.

(3) Rule 7 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, shall be taken as not requiring a deduction of any shipping investment allowance from the cost of any ship for the purposes of that Rule.

19. —Paragraph (3) of Rule 6 of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, and section 4 of the Finance Act, 1937 (No. 18 of 1937), shall apply in relation to a shipping investment allowance as they apply in relation to deductions allowable in respect of wear and tear of machinery or plant.

20. —(1) In this Part of this Act, “basis period” has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Part of this Act, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D of the Income Tax Act, 1918, in respect of the trade in question or, where, by virtue of any Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade—

(a) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only;

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) (a) Any reference in the proviso to subsection (2) of this section to the permanent discontinuance of a trade shall be construed as including a reference to the occurring of any event which, under any of the provisions of the Income Tax Acts, is to be treated as equivalent to the permanent discontinuance of a trade.

(b) Any reference in the said proviso to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

21. —Where a shipping investment allowance has been made to any person in respect of expenditure incurred on the purchase of a new ship and the ship is sold by him without the ship having been used by him for the purposes of his trade or before the expiration of the period of five years from the day on which the ship began to be so used, the shipping investment 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 a shipping investment allowance or the substitution therefor of an initial allowance under Part V of the Finance Act, 1956 (No. 22 of 1956).

22. —Where this Part of this Act provides for a shipping investment allowance to be made to a company for the purposes of income tax, in respect of any expenditure, the amount of the allowance shall be deducted in computing the profits of that company for the purposes of corporation profits tax for the accounting period in which the expenditure is incurred.

23. —This Part of this Act shall, so far as it relates to income tax (including sur-tax), be read and construed together with the Income Tax Acts and shall, so far as it relates to corporation profits tax, be read and construed together with Part V of the Finance Act, 1920, as amended or extended by subsequent enactments.