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Capital Allowances Act 2001

Chapter 1: Introduction

1363.This Chapter introduces mineral extraction allowances. They are given on qualifying expenditure and are only available to mineral extraction traders.

1364.Section 394 sets out the basic conditions for entitlement to mineral extraction allowances and some definitions for this Part.

1365.Section 395 gives the meaning of qualifying expenditure and points to more detailed definitions and exceptions regarding qualifying expenditure.

1366.Sections 396 and 397 give the meaning of the key terms “mineral exploration and access” and “mineral asset”.

1367.Section 398 is a tie-breaker rule if expenditure might otherwise be on both mineral exploration and access and on a mineral asset.

1368.Section 399 sets out expenditure that cannot be qualifying expenditure.

Section 394: Mineral extraction allowances

1369.This section is based on section 98(1) and parts of sections 105(1), 109(1), 121(1) and (2) and section 161(2) of CAA 1990. It provides that allowances are available to mineral extraction traders who have incurred qualifying expenditure and defines “mineral extraction trade”. This term is used in place of the slightly longer term “trade of mineral extraction” in CAA 1990. The part of section 121(2) of CAA 1990 that is not rewritten in this section is at paragraph 87 of Schedule 3 because that part of section 121(2) relates only to that provision.

1370.Subsection (3) omits the examples of geothermal energy presently in section 161(2) of CAA 1990. They are not needed. See Note 46 in Annex 2.

Section 395: Qualifying expenditure

1371.This section is based on part of section 105(1) and (3) of CAA 1990. It defines “qualifying expenditure” and indicates that there are two main classes of qualifying expenditure (on mineral exploration and access and on acquiring mineral assets).

1372.Subsection (1)(c) refers to amounts treated as qualifying expenditure on mineral exploration and access. In CAA 1990 these amounts are treated as expenditure on mineral exploration and access leaving to be inferred the fact that they are qualifying expenditure. See Note 50 in Annex 2.

Sections 396 and 397: Meaning of “mineral exploration and access” and “mineral asset”

1373.These sections are based on section 121(1) and 105(6) of CAA 1990.

Section 398: Relationship between main types of qualifying expenditure

1374.This section is based on section 105(7) of CAA 1990.

Section 399: Expenditure excluded from being qualifying expenditure

1375.This section is based on section 105(4) and part of section 105(5) of CAA 1990. It sets out expenditure which does not qualify for allowances under this Part so as to give in this Chapter an early indication of items that will not get allowances under this Part. For example, most expenditure on plant or machinery cannot be qualifying expenditure.

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Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.


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