Clause 3

by deleting the words “subsection (2)” in the second line of subsection (1) and substituting the words “subsections (2) and (3)”; and

by deleting subsections (2), (3) and (4) and substituting the following subsections:“(2) In determining the qualifying income of the post-pioneer company for the basis period for any year of assessment —

the allowances provided for in sections 16, 17, 18, 19, 19A, 20, 21 and 22 of the Income Tax Act [Cap. 134] shall be taken into account notwithstanding that no claim for such allowances has been made;

the allowances referred to in paragraph (a) for that year of assessment shall firstly be deducted against the qualifying income, and any unabsorbed allowances shall be deducted against the other income of the company subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act in accordance with subsection (3);

the balance, if any, of the allowances after the deduction in paragraph (b) shall be available for deduction for any subsequent year of assessment in accordance with section 23 of the Income Tax Act and shall be made in the manner provided in paragraph (b);

any loss incurred for that basis period shall be deducted in accordance with subsection (3) against the other income of the company subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act; and

the balance, if any, of the losses after the deduction in paragraph (d) shall be available for deduction for any subsequent year of assessment in accordance with section 37 of the Income Tax Act firstly against the qualifying income, and any balance of the losses shall be deducted against the other income of the company subject to tax at the rate of tax under section 43(1)(a) of the Income Tax Act [Cap. 134] in accordance with subsection (3).(3) Section 37B of the Income Tax Act shall apply with such modifications as may be necessary in relation to the deduction of the allowances provided for in sections 16, 17, 18, 19, 19A, 20, 21 and 22 of that Act or the losses under section 37 of that Act in respect of the qualifying income of the post-pioneer company and such part of its income as is subject to tax at the rate of tax under section 43(1)(a) of that Act; and for the purpose of such application any reference in section 37B of that Act to —

concessionary income shall be read as a reference to its qualifying income; and

normal income shall be read as a reference to such part of its income as is subject to tax at the rate of tax under section 43(1)(a) of that Act.(4) In this section, “qualifying income” means the income of a post-pioneer company in respect of its qualifying activities.”.