Income Tax Act 2007 section 123

Meaning of "the loss has a capital allowances connection" and "the business has a relevant agricultural connection"

Section 123 defines two key terms used in the property loss relief rules: when a loss has a "capital allowances connection" and when a business has a "relevant agricultural connection".

• A property business loss has a capital allowances connection where capital allowances treated as business expenses exceed any balancing charges treated as business receipts — but structures and buildings allowances are excluded from this calculation
• A business has a relevant agricultural connection where it relates to land that includes an agricultural estate and allowable agricultural expenses attributable to that estate have been deducted in calculating the loss
• An agricultural estate is land managed as one estate that consists of or includes land occupied wholly or mainly for husbandry (farming) purposes
• Allowable agricultural expenses cover maintenance, repairs, insurance and management costs of the estate, but exclude loan interest, expenses for parts used solely for non-farming purposes, and are reduced proportionately where parts are used for mixed purposes