Commentary on Sections Overview Overview Section 288: The additional calculation rule
1180.This section provides for the amount of a receipt calculated under section 277 or sections 279 to 282 of this Act to be reduced if there is an earlier taxed receipt in relation to the same property. It is based on section 37(2), (3), (7) and (9) of ICTA.
1181.The amount to be reduced is referred to in this section, and in section 289, as “the receipt under calculation”.
1182.Section 37(2) of ICTA provides for the reduction of amounts treated as rent under section 34 or 35 of ICTA which arise in respect of the “grant or disposition” of a lease. But section 37(2) of ICTA does not provide for the reduction of an amount in respect of a sum paid under section 34(5) of ICTA for the variation or waiver of the terms of a lease because a variation or waiver is not in respect of the grant or disposition of a lease.
1183.Section 287 extends relief to payments for variation or waiver. This is reflected in the reference to section 281 in subsection (2) of this section. See Change 71 in Annex 1.
1184.This section introduces the label “basic relieving amount” for the amount by which the receipt under calculation is to be reduced.
1185.Subsection (3) requires the basic relieving amount to be restricted under section 289(5) so that it does not exceed the amount of the receipt under calculation. This means that if the basic relieving amount exceeds the amount of the later taxed receipt, the excess is not available to offset against other receipts. See Change 73 in Annex 1.
1186.If there is more than one taxed receipt by reference to which the receipt under calculation may be reduced, it is for the person entitled to the relief to decide the order in which relief is to be taken by reference to those receipts. And where a basic relieving amount has been calculated by reference to more than one taxed receipt, subsection (3) provides for the total of the basic relieving amounts to be restricted under section 289(5) .
1187.The use of the “unreduced amount” of the taxed receipt (defined in section 290(2) of this Act) in the formula in subsection (4) makes clear that the basic relieving amount by reference to a taxed receipt is to be calculated according to the amount of that receipt before any reductions or deductions.
1188.The definition of “receipt period” in relation to a receipt under section 277 and sections 279 to 282 in subsection (6) is based on the definition of “the period in respect of which an amount arose” in section 37(7)(b) of ICTA.