Special Committee on the Finance Bill, 1992 debate -
Tuesday, 12 May 1992

SECTION 79.

Question proposed: "That section 79 stand part of the Bill."

Miss Flaherty

This, again, provides for 100 per cent of exploration expenditure to be allowed. Could the Minister clarify how the current situation compares with what obtaining under the 1985 Act; what level of improvement is involved?

In regard to subsection (4) which says "Where a person disposes of any assets representing exploration expenditure incurred by him in connection with an area which at the time of the disposal is, or which subsequently becomes, a relevant field (or part of such field), the person who acquires the assets shall, if he carries on a petroleum trade which consists of or includes the working of the relevant field (or, as the case may be, the part of the relevant field), be deemed, for the purposes of this section, to have incurred—" There are limits involved in that. What is the purpose of those limits when the firm, or the activity, is already in place?

Mr. B. Ahern

On the first question relating to development expenditure, that goes from 40 per cent to 100 per cent of write-offs. For exploration it stays at 100 per cent, but the big difference is that, for abortive exploration expenditure, it can now be carried forward for 25 years. I missed the last point of the question regarding subsection (4).

Miss Flaherty

I was asking what was the purpose of subsection (4).

The increase, provided for in subsection (5), from 15 to 25 years will be a valuable improvement. I congratulate the Minister on it. It would cover the possibility of a number of operators or exploration companies who may have left our area coming back in. It is well chosen and, I hope, will have the desired effect of encouraging companies who may have left our waters to come back in, knowing that the losses and expenditures incurred to date could be recouped in this fashion. It is a very important improvement and one that we, in particular, would support and welcome.

Mr. B. Ahern

Subsection (4) caters for the situation in which an individual buys into a field. The benefits that had been held by the exploration licence holder can be shared. The buyer has a right to buy into the benefits.

Miss Flaherty

The provision for a limit may occur elsewhere. Is there a limit on the claim by somebody who buys in, in relation to the set off of development, exploration, abandonment or failure costs of the earlier operation? Why should that be restricted? Why should the new owner be prohibited from having that if, in fact, the operation is in place and has been working and producing and making a contribution to our exploration?

Mr. B. Ahern

The issue is that an individual buying in cannot get more tax relief than the cost they have put forward to buy into the field.

Miss Flaherty

All right.

Mr. B. Ahern

Otherwise they would be getting excessive tax relief.

Question put and agreed to.