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Restriction of reliefs where individual is not actively participating in certain trades.
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12.—(1) Chapter 4 of Part 12 of the Principal Act is amended by inserting the following after section 409C:
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“409D.—(1) In this section—
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‘active trader’, in relation to a trade, means an individual who works for the greater part of his or her time on the day-to-day management or conduct of the trade;
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‘electronic’ includes electrical, digital, magnetic, optical, electromagnetic, biometric, photonic and any other form of related technology;
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‘specified provisions’ means sections 305 and 381;
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‘specified trade’ means a trade consisting of or including—
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(a) the generation of electricity,
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(b) trading operations which are petroleum activities (within the meaning of section 21A),
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(c) the development or production of—
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(i) films,
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(ii) film projects,
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(iii) film properties, or
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(iv) music properties,
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(d) the acquisition of rights to participate in the revenues of—
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(i) film properties, or
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(ii) music properties,
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or
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(e) the production of, the distribution of, or the holding of an interest in—
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(i) either or both a film negative and its associated soundtrack, a film tape or a film disc,
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(ii) an audio tape or audio disc, or
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(iii) a film property produced by electronic means or a music property produced by electronic means;
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‘relevant year of assessment’ means—
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(a) in relation to a trade consisting of or including the generation of electricity, the year of assessment 2002 or any subsequent year during which the individual carried on such trade otherwise than as an active trader, and
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(b) in relation to any other specified trade, the year of assessment 2003 or any subsequent year during which the individual carried on that trade otherwise than as an active trader.
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(2) Where, in the case of an individual who carries on a specified trade otherwise than as an active trader, an amount may apart from this section be given or allowed under any of the specified provisions—
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(a) in respect of a loss sustained by the individual in the specified trade in a relevant year of assessment, including a loss which is computed taking account of interest laid out or expended by the individual in respect of a loan where the proceeds of the loan were used to incur expenditure on machinery or plant used for the purposes of the specified trade concerned, or
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(b) as an allowance to be made to the individual for a relevant year of assessment either in taxing the specified trade or by means of discharge or repayment of tax to which he or she is entitled by reason of the individual carrying on the specified trade concerned,
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then, notwithstanding any other provision of the Tax Acts, such an amount may be given or allowed only against income from the specified trade concerned and shall not be allowed in computing any other income or profits or in taxing any other trade or in charging any other income to tax.”.
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(2) This section applies as respects—
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(a) an allowance under Part 9 in respect of machinery or plant to be made—
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(i) for the year of assessment 2002 or any subsequent year in relation to a trade consisting of or including the generation of electricity, and
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(ii) for the year of assessment 2003 or any subsequent year in relation to any other trade,
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and
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(b) any loss sustained in—
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(i) a trade consisting of or including the generation of electricity in the year of assessment 2002 or any subsequent year, and
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(ii) any other trade in the year of assessment 2003 or any subsequent year.
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