Perhaps the Minister would give us an indication of the purposes of this section.
SECTION 80.
Question proposed: "That section 80 stand part of the Bill."
Section 80 provides for the granting of an exploration allowance against the profits of the petroleum trade carried on by one company in respect of exploration expenditure incurred by another, where one company is a wholly owned subsidiary of the other company, or both are wholly owned subsidiaries of a third company. Subsection (1) ties the transferable exploration expenditure into section 79 by ensuring that it is the same type of unreimbursed expenditure that may be allowed under section 79 (1). It specifies the type of group structure required and provides for an election by the exploring company to transfer to another company so much of its exploration expenditure as it specifies.
Paragraphs (i) and (ii) deem the expenditure so transferred to have been incurred by the transferee. Subsection (2) provides that transferred expenditure is to be treated as incurred by the transferee at the time it was actually incurred. It prevents all abortive exploration expenditure being used by the transferee any later than it could have been used by the exploration company. Also a transferee company which was not in existence when the expenditure was incurred shall be deemed to have been so in existence. The exploration expenditure deemed to have been incurred by a transferee company is also deemed to have been incurred for the purpose of any petroleum trade carried by it and not to have been met by the exploration company, to prevent operation of the provision which denies an allowance for exploration expenditure which has been met by a person other than the claimant. That refers to section 79 (1).
Subsections (3) and (4) prevent duplication of allowances. Subsection (5) defines a wholly owned subsidiary and adopts rules set out in the Finance Act, 1973 for the purpose of determining indirect ownership of shares.
Thank you, Minister.
Question put and agreed to.