Section DU 12 — Income Tax Act 2007: Amount written off by holding company

DU 12 Amount written off by holding company Deduction (1) A holding company of a mining company is allowed a deduction for an amount written off a loan it made to the mining company. Exclusions (2) The following are not included within the words “ an amount written off a loan it made to the mining company ” in subsection (1): (a) an amount of interest that the holding company writes off; or (b) an amount of a loan to the extent to which a mining holding company makes the loan from its reinvestment profit; or (c) an amount of a loan made on or after 1 October 1978 to the extent to which the loan— (i) is made to obtain an unfair advantage for tax purposes; and (ii) is excessive, having regard to previous loans made by the holding company and any other circumstances. Amount of deduction (3) The deduction is no more than the lesser of— (a) 50% of the amount that, in the absence of this section, would be the net income of the holding company in the income year in which the amount is written off; and (b) the prescribed proportion of the total amount of mining exploration expenditure and mining development expenditure incurred by the mining company before the end of the income year in which the amount referred to in subsection (1) is written off, reduced by the total amount of deductions the holding company is allowed under this section in all income years before the income year in which that amount is written off. Timing of deduction (4) The deduction for the amount written off is allocated to the income year in which the amount is written off. Reduction of amount (5) The amount calculated under subsection (3) is reduced in the circumstances described in section DZ 12(4) (Mineral mining: 1954–2005). Link with subpart DA (6) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply. Defined in this Act: amount , capital limitation , deduction , general limitation , general permission , holding company , income year , interest , loan , mining company , mining development expenditure , mining exploration expenditure , net income , prescribed proportion , reinvestment profit , supplement , tax , Compare: 2004 No 35 s DU 12 Section DU 12(3)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 101(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section DU 12(3)(b): substituted (with effect on 1 April 2008), on 6 October 2009, by section 101(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).