Finance Act, 1994

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Computer software.

24.—The Income Tax Act, 1967 , is hereby amended—

(a) by the insertion after section 241 of the following section:

“241A.—(1) If a person carrying on a trade incurs capital expenditure in acquiring for the purposes of the trade a right to use or otherwise deal with computer software, then, for the purposes of this Part, Chapters I and III of Part XV and Chapters II and V of Part XVI—

(a) the right and the software to which it relates shall be treated as machinery or plant,

(b) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(c) for so long as the person is entitled to the right, that machinery or plant shall be treated as belonging to that person.

(2) In any case where—

(a) a person carrying on a trade incurs capital expenditure on the provision of computer software for the purposes of the trade, and

(b) in consequence of the person incurring that expenditure, the computer software belongs to that person, but the computer software does not constitute machinery or plant,

then, for the purposes of this Part, Chapters I and III of Part XV and Chapters II and V of Part XVI, the computer software shall be treated as machinery or plant.”,

(b) by the insertion after paragraph (c) in subsection (1) of section 272 of the following paragraph:

“(d) in the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, any event whereby the person grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum,”,

and

(c) by the substitution in subsection (1) of section 304 of the following paragraph for paragraph (a) of the definition of “sale, insurance, salvage or compensation moneys”:

“(a) where the event is a sale of any property, including the sale of a right to use or otherwise deal in machinery or plant consisting of computer software, the net proceeds to the person of the sale,”.