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Adjustment of tax deductible in certain circumstances.
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191.—The Principal Act is amended by the insertion of the following after section 12C—
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“12D.—(1) For the purposes of this section—
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‘full year’ shall be any continuous period of twelve months;
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‘interest’ in relation to immovable goods has the meaning assigned to it by section 4.
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(2) Where—
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(a) a person makes a transfer of an interest in immovable goods in accordance with section 3(5)(b)(iii), and
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(b) but for the application of that section, tax would have been chargeable on the transfer, and the person (referred to in this section as a ‘transferor’) was entitled to deduct part of the tax charged on the most recent purchase or acquisition of an interest in, or the development of, the immovable goods subject to that transfer,
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that transferor shall, for the purposes of section 12, be entitled to increase the amount of tax deductible for the taxable period within which the transfer is made by an amount calculated in accordance with the following formula:
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where—
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T is the tax chargeable on that most recent purchase or acquisition of an interest in, or that development of, the immovable goods,
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TD is the tax that the transferor was entitled to deduct on that most recent purchase or acquisition of an interest in, or that development of, the immovable goods,
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Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and
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N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:
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but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.
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(3) Where a transferor acquired an interest in immovable goods as a result of a transfer in accordance with section 3(5)(b)(iii) and the transferor did not develop those immovable goods since the acquisition then, for the purposes of subsection (2), the amount by which that transferor shall be entitled to increase the amount of tax deductible, in accordance with section 12, for the taxable period in which the transferor transfers those goods, shall be calculated in accordance with the following formula:
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where—
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A is the amount which the transferor was required to calculate and reduce his or her deductible amount by, in accordance with subsection (4), when the transferor acquired the interest in those goods,
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Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and
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N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:
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but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.
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(4) Where a person receives an interest in immovable goods as a result of a transfer and the person would not have been entitled to deduct all the tax that would have been chargeable on the transfer but for the application of section 3(5)(b)(iii), that person shall reduce the amount of tax deductible by that person, for the purposes of section 12, for the period within which the transfer was made, by an amount calculated in accordance with the following formula:
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where—
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T1 is the amount of tax that would have been chargeable on the transfer if section 3(5)(b)(iii) did not apply,
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TD1 is the amount of tax that would have been deductible by the transferee if section 3(5)(b)(iii) had not applied to the transfer,
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Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and
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N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:
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but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.”.
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