Clause 22

This section shall apply to any company whose income for any year of assessment is subject to tax as concessionary income and normal income.(2) Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the concessionary income of a company to which this section applies, and there is any chargeable normal income of the company, those unabsorbed allowances or losses shall be deducted against the chargeable normal income in accordance with the following provisions:

in the case where those unabsorbed allowances or losses do not exceed that chargeable normal income multiplied by the adjustment factor, that chargeable normal income shall be reduced by an amount arrived at by dividing those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and

in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by multiplying that chargeable normal income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the concessionary income, for the next succeeding year of assessment and any subsequent year of assessment in accordance with section 23 or 37, as the case may be, and that chargeable normal income shall be nil.(3) Where, for any year of assessment, there are any unabsorbed allowances or losses in respect of the normal income of a company to which this section applies, and there is any chargeable concessionary income of the company, those unabsorbed allowances or losses shall be deducted against that chargeable concessionary income in accordance with the following provisions:

in the case where those unabsorbed allowances or losses do not exceed that chargeable concessionary income divided by the adjustment factor, that chargeable concessionary income shall be reduced by an amount arrived at by multiplying those unabsorbed allowances or losses by the adjustment factor, and those unabsorbed allowances or losses shall be nil; and

in any other case, those unabsorbed allowances or losses shall be reduced by an amount arrived at by dividing that chargeable concessionary income by the adjustment factor, and those unabsorbed allowances or losses so reduced shall be added to, and be deemed to form part of, the corresponding allowances or losses in respect of the normal income, for the next succeeding year of assessment and any subsequent year of assessment in accordance with section 23 or 37, as the case may be, and that chargeable concessionary income shall be nil.(4) Where a company to which this section applies ceases to derive concessionary income in the basis period for any year of assessment but derives normal income in that basis period, subsection (2) shall apply, mutatis mutandis, to any unabsorbed allowances or losses in respect of the concessionary income of the company for any year of assessment subsequent to that year of assessment.(5) Where a company to which this section applies ceases to derive normal income in the basis period for any year of assessment but derives concessionary income in that basis period, subsection (3) shall apply, mutatis mutandis, to any unabsorbed allowances or losses in respect of the normal income of the company for any year of assessment subsequent to that year of assessment.(6) Nothing in this section shall be construed as affecting the application of section 23 or 37 unless otherwise provided in this section.(7) For the purposes of this section —“adjustment factor”, in relation to any year of assessment, means the factor ascertained in accordance with the formula where Ais the rate of tax under section 43(1)(a) for that year of assessment; andBis the concessionary rate of tax for that year of assessment at which the concessionary income is subject to tax;“allowances” means allowances under section 16, 17, 19, 19A, 19B, 19C, 20, 21, 22 or 23 including unabsorbed allowances which arose in any year of assessment prior to the year of assessment 1994;“chargeable concessionary income” means concessionary income after deducting expenses, donations, allowances or losses allowable under this Act against the concessionary income;“chargeable normal income” means normal income after deducting expenses, donations, allowances or losses allowable under this Act against the normal income;“concessionary income” means income subject to tax at the concessionary rate of tax in accordance with regulations made under section 43A, 43C (in respect of those relating to offshore general insurance business only), 43D, 43E, 43F, 43G, 43H, 43J, 43K or 43L, as the case may be;“losses” means losses which are deductible under section 37 including unabsorbed losses incurred in respect of any year of assessment prior to the year of assessment 1994;“normal income” means income subject to tax at the rate of tax under section 43(1)(a);“unabsorbed allowances or losses in respect of the concessionary income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under this Act against the concessionary income;“unabsorbed allowances or losses in respect of the normal income” means the balance of such allowances or losses after deducting expenses, donations, allowances or losses allowable under this Act against the normal income.”.