Section IZ 2 — Income Tax Act 2007: Petroleum mining companies: treatment of payments from shareholders

IZ 2 Petroleum mining companies: treatment of payments from shareholders When this section applies (1) This section applies if— (a) a tax loss arises from the allowance to a petroleum mining company in the 1990–91 tax year, or earlier tax year, of a deduction or further deduction under sections 214B(6), (13)(b), (14)(b), and (18)(c) of the Income Tax Act 1976 (or under section DZ 6(4) or (9)(c) of the Income Tax Act 1994); and (b) a payment has been made by a company, which is at the time of the payment a shareholder of the petroleum mining company, to the petroleum mining company an amount that was used for the purposes of petroleum development expenditure of the kind referred to in section DZ 6(4) for which the deduction or further deduction referred to in paragraph (a) is allowed. Shareholder companies’ tax loss components (2) The shareholder company has a tax loss component equal to the amount that bears to the tax loss the same proportion as the payment bears to the petroleum development expenditure. However, the amount of the tax loss component must be no more than the total amount paid. Elections by shareholder companies (3) For the purposes of subsection (2), the shareholder company must make an election by notice under section 214B(22)(d) of the Income Tax Act 1976 or section DZ 6(12)(d) of the Income Tax Act 1994. Treatment of tax losses (4) The tax loss may not be carried forward and used except to the extent to which the amount of the tax loss is more than the total of all amounts deducted under subsection (2) in the tax year in which the tax loss arises. Further deductions (5) Despite subsection (4), if the tax loss arises from the allowance of a further deduction under the second proviso to section 214B(6) of the Income Tax Act 1976 or under section DZ 6(4) of the Income Tax Act 1994, the tax loss is treated as a tax loss arising in the tax year which in section DZ 6(4) is referred to as the year of cessation. Relationship with section CV 1 (6) Section CV 1 (Group companies) does not apply to— (a) a tax loss referred to in this section except to the extent to which it is more than the total of all amounts deducted under subsection (2) in the tax year in which the tax loss arises; or (b) a tax loss for the 1978–79 or earlier tax year. Defined in this Act: amount , company , deduction , group of companies , notice , petroleum development expenditure , petroleum mining company , shareholder , tax loss , tax year , Compare: 2004 No 35 s IH 2