Section IZ 3 — Income Tax Act 2007: Petroleum mining companies: use of loss balances

IZ 3 Petroleum mining companies: use of loss balances When this section applies (1) This section applies when— (a) some or all of a loss balance of a petroleum mining company for the 1990–91 tax year or earlier tax year arises from the allowance of— (i) a deduction of an amount of petroleum exploration expenditure that the company incurs on or before 30 September 1990 in exploring or searching for petroleum in an area that is or is subsequently comprised in an existing privilege that was a mining licence or in 2 or more such areas; or (ii) a deduction of an amount for petroleum development expenditure that the company incurs before 30 September 1990; and (b) at the start of a tax year following the tax year in which the tax loss arose, a loss balance relating to the permit area remains after taking into account any deductions that the petroleum mining company, or another company, has for the expenditure or any amounts the company has subtracted from its net income for earlier tax years; and (c) the petroleum mining company was immediately before the commencement of section 214B of the Income Tax Act 1976 a company to which section 216 of that Act applied. Using loss balances (2) Despite section IA 5 (Restrictions on companies’ loss balances carried forward) or GB 3 (Arrangements for carrying forward loss balances: companies), the loss balance may be subtracted from the petroleum mining company’s net income for the tax year referred to in subsection (1)(b) to the extent to which it is no more than the net income of the company for the tax year if the company’s only source of assessable income were from the relevant permit area. Loss balances carried forward (3) If, after applying subsection (2), the company has a loss balance remaining, the amount is carried forward to the next tax year and subsection (2) applies in that tax year, and so on. References in section (4) For the purposes of this section,— (a) a reference in this section to expenditure in exploring or searching for petroleum in an area that is or is subsequently comprised in an existing privilege that was a mining licence is taken as including a reference to expenditure in exploring or searching for petroleum in an area that is outside but continuous or geologically contiguous with the area, being exploring or searching that was included, whether originally or additionally, in the programme of exploring or searching as a consequence of which application was made for the existing privilege: (b) permit area means an area, and may include more than 1 area, of an existing privilege referred to paragraph (d) of the definition of existing privilege in section 106 of the Crown Minerals Act 1991. Relationship with section IZ 2 (5) Section IZ 2 overrides this section. Defined in this Act: amount , assessable income , company , deduction , existing privilege , loss balance , net income , permit area , petroleum development expenditure , petroleum exploration expenditure , petroleum mining company , tax loss , tax year , Compare: 2004 No 35 s IH 1(2)