142 Distributions out of profits of certain mines

Summary

This section is concerned with distributions made out of certain mining profits which qualified for relief from tax up to 5 April, 1976. The distributions to which this relief applied are distributions made out of income which has been relieved from taxation under the Finance (Profit of Certain Mines) (Temporary Relief from Taxation) Act, 1956, or Chapter II (Profits of Certain Mines) of Part XXV of the Income Tax Act, 1967. Such distributions are disregarded for income tax purposes and, in the case of companies, treated as if the recipient company had itself been granted relief in respect of the income represented by the distribution.

Details

Definitions

(1) “exempted income” is income of a company which has been relieved under —

• the Finance (Profit of Certain Mines) (Temporary Relief from Taxation) Act, 1956, or
• Chapter II (Profits of Certain Mines) of Part XXV of the Income Tax Act, 1967.

“other income” is income of a company which is not exempted income.

Distributions

(2) Where for an accounting period a company makes a distribution out of exempted income the distribution does not rank as income for the purpose of the Income Tax Acts.

(3) Where a distribution is made partly out of exempted income and partly out of other income, the distribution is treated as if it consisted of 2 distributions, one made out of exempted income and the other made out of other income. The distribution made out of exempted income does not rank as income for the purpose of the Income Tax Acts.

(4) A distribution received by a company (including part of a distribution treated as a distribution) and made out of exempted income is treated in the hands of the receiving company as if it were exempted income, with the same consequences as if the receiving company had itself being granted mining relief in respect of the income represented by the distribution.

Attribution to accounting periods

(6) Subsections (7) and (8) of section 144 apply to distributions out of exempted income. These provisions provide that a distribution for an accounting period is regarded as made as far as possible out of the distributable income of that period and any excess of the distribution over that income is attributed to the preceding accounting period or periods.

Subsections (8) and (9) of section 140 apply to distributions out of exempted income. These provisions provide, respectively, for the apportionment of distributions where the period for which a company makes up accounts is partly within and partly outside an accounting period for corporation tax purposes, and for regarding a distribution which is not for any specified period as having being made for the accounting period in which it is made.

Dividend warrants

(7) The statements accompanying dividends and other distributions must show, where appropriate, that distributions are made out of exempted income.

Relevant Date: Finance Act 2019