Treatment of unallowed expenditure on transfer of petroleum business: capital proceeds offset expenditure, excess may be taxed as business income. Special tax rules apply when a petroleum or natural gas prospecting, extraction or production business, or an interest in it, is transferred under the relevant agreement: capital proceeds are applied against expenditure remaining unallowed, permitting a deduction for any shortfall in the year of transfer; any excess proceeds (within defined limits) are taxable as business income in the year of transfer; if proceeds meet or exceed the unallowed expenditure, no deduction is allowed thereafter. Transfers after business cessation are treated as if the business existed, and amalgamation transfers are given a tailored application.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Treatment of unallowed expenditure on transfer of petroleum business: capital proceeds offset expenditure, excess may be taxed as business income.
Special tax rules apply when a petroleum or natural gas prospecting, extraction or production business, or an interest in it, is transferred under the relevant agreement: capital proceeds are applied against expenditure remaining unallowed, permitting a deduction for any shortfall in the year of transfer; any excess proceeds (within defined limits) are taxable as business income in the year of transfer; if proceeds meet or exceed the unallowed expenditure, no deduction is allowed thereafter. Transfers after business cessation are treated as if the business existed, and amalgamation transfers are given a tailored application.
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