I move amendment No. 2:—
In page 27, to insert "or" after "1956," in line 58 and to delete "or" after "1956" in line 61 and in page 28 to delete lines 1 to 4.
Amendments Nos. 2 and 4 may be discussed together. They arise out of points made by Deputy Sweetman on Committee Stage, in connection with Section 64, which is now Section 65. Deputy Sweetman inquired about the interplay of Section 64, as it then was, and earlier provisions of the Bill. He wished to be assured that export companies would be dealt with in the same manner as Shannon companies. I promised to examine the case again and, on examination, I am informed that there is some slight inconsistency in the way the two companies are dealt with. Although it is not terribly important, still it is rather involved.
Where a Shannon company uses machinery for both exempted operations and liable operations, it would be improper to allow the full wear and tear of the machinery against the liable operations. The correct course is to split the wear and tear and to allow a proportion against the liable operations. This principle was laid down in Section 8 of the principal Act passed last year in regard to Shannon companies. The same principle should, of course, apply when we come to deal with balancing allowances or balancing charges.
Section 40 of the original Bill deals, among other things, with export companies and Shannon companies and it relates solely to machinery. That section provides that when we are making our computations for a balancing allowance or balancing charge, all wear and tear allowances which would have been given if the company had been liable in the ordinary way shall be deemed to have been given. The effect of this is to secure that wear and tear allowances, which would not have been due year by year in the past, shall not be available to increase a balancing allowance or to cut down a balancing charge.
This puts the position in order as regards export companies. They, unlike Shannon companies, are entitled to their full annual allowances and their exemptions are in terms of tax. Section 40, as it was in the original Bill, also puts matters right as regards Shannon companies. Since, however, a Shannon company may be conducting both exempted and liable operations, Section 64, as it then was, is necessary for a proper apportionment of the balancing allowance or balancing charge that may arise on the sale of the machinery.
It is as regards industrial dealings that the inconsistency has manifested itself. Section 26, as it was, provides as regards buildings, in connection with balancing allowances or balancing charges, that, for a year in which no annual allowance has been given, a notional allowance is to be written off. It is adequate as regards export companies but it is, as I have now discovered, defective in relation to Shannon companies. The reason is that it does not meet the case where a partial allowance has been given to a Shannon company in the case of mixed exempted and liable operations. It cannot be said in such circumstances that no annual allowance has been given. This defect can be corrected by an amendment of Section 64, now Section 65, of the Bill which covers, for Shannon companies, balancing allowances and balancing charges.
If you take first Amendment No. 4 on the Order Paper, as the section stands, the balancing allowance or balancing charge for a Shannon company may be reduced, but, in the case of a balancing charge, an increase might be called for in relation to a building where the company had been carrying on both exempted and liable operations and there had been no notional writing-off for years in which a partial annual allowance had been given. The amendment corrects this. It removes a discrepancy that would otherwise have arisen as between Shannon companies, on the one hand, and export and other companies, on the other.
The amendment to Section 41 is purely consequential. As regards both building and machinery, everything will now be adjusted in the case of Shannon companies on the making of a balancing allowance or a balancing charge. A notional write-off will, therefore, no longer be necessary. The reference to Shannon companies is accordingly being deleted from Section 41.