Finance Act, 1996

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Deduction for increase in stock values.

134.—(1) Subject to the provisions of this Chapter, if—

(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 its 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 its trading income, 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”:

Provided that, where the person is a company, the amount of the deduction 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 16 and 18 of the Corporation Tax Act, 1976 , and after all deductions and additions for that period by virtue of section 14 of that Act and before any deduction allowed by virtue of this section:

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

(a) a deduction under section 14 of the Corporation Tax Act, 1976 , 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, or

(b) a set-off of a loss under section 16 of the Corporation Tax Act, 1976 , 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

(c) a set-off of a loss under section 18 of the Corporation Tax Act, 1976 , for any accounting period earlier than the relevant period in respect of a loss sustained in the trade.

(2) 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 has effect 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 309 of the Income Tax Act, 1967 , 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 311 of the Income Tax Act, 1967 , for any year of assessment earlier than the relevant year in respect of a loss sustained in the trade,

(b) the provisions of section 241 (3) of the Income Tax Act, 1967 , or of 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 owing to there being no profits or gains chargeable for that year or an insufficiency of profits or gains chargeable for that year,

(c) the provisions of section 318 of the Income Tax Act, 1967 , shall not apply to the capital allowances or any part thereof 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.

(3) (a) 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, 1997.

(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 have effect for any purpose of the Income Tax Acts for any year of assessment later than the year 1996-97.

(4) 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 the chargeable period.

(5) The provisions of this section shall apply to a trade of farming carried on by a partnership as they apply to a trade of farming carried on by a person.