INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10AA - Prospecting and mining for petroleum  

SECTION 124ABA   ALLOWABLE CAPITAL EXPENDITURE IN RESPECT OF CASH BIDDING PAYMENTS FOR EXPLORATION PERMITS AND PRODUCTION LICENCES  

124ABA(1)   [Qualifying interest in permit plus entitlement to cash bidding amount]  

Where, immediately before the grant of a production licence or a first production licence, as the case may be, that is related to a cash bidding exploration permit, a person who has a qualifying interest or qualifying interests in relation to the permit also has an entitlement to an eligible cash bidding amount in relation to the permit, the taxpayer shall be taken for the purposes of this Division to have incurred, at the time at which the production licence is granted, expenditure of a capital nature in relation to the qualifying interest or qualifying interests of an amount equal to the eligible cash bidding amount.

124ABA(1A)   [Cash bidding payment for grant of exploration permit]  

Where:

(a) a taxpayer makes a permit cash bidding payment in relation to the grant of an exploration permit; and

(b) the payment is made at or after the time of the grant of a production licence that is related to the exploration permit;

the amount of the payment shall be taken, for the purposes of this Division, to be expenditure of a capital nature incurred by the taxpayer at the time of payment.

124ABA(1B)   [Licence cash bidding payment]  

Each licence cash bidding payment paid by a taxpayer shall be taken, for the purposes of this Division, to be expenditure of a capital nature incurred by the taxpayer:

(a) if the amount is paid before the grant of the production licence - at the time of grant; and

(b) in any other case - at the time the payment is made.

124ABA(2)   [Acquisition of interest from vendor entitled to eligible cash bidding amount]  

Where, at any time before the grant of a production licence or a first production licence, as the case may be, that is related to a cash bidding exploration permit, a person (in this section referred to as the purchaser ) incurs expenditure in acquiring a qualifying interest in relation to the permit from another person (in this section referred to as the vendor ) who has an entitlement to an eligible cash bidding amount in relation to the permit, the purchaser and vendor may agree to transfer to the purchaser the proportion of the vendor's entitlement to the eligible cash bidding amount specified in the agreement.

124ABA(3)   [Agreement re transfer of entitlement to eligible cash bidding amount]  

An agreement under subsection (2) shall:

(a) be in writing signed by or on behalf of the persons making the agreement;

(b) specify as the amount of the entitlement that is to be transferred to the purchaser an amount that does not exceed the expenditure incurred by the purchaser in acquiring the qualifying interest in relation to the exploration permit reduced by any amount of that expenditure specified in an agreement previously made under subsection 124AB(1) , or specified in a notice given under subsection 124AB(1) of this Act as in force immediately before 1 July 1992 or before the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later; and

(c) be made not later than 2 months after the end of the year of income of the purchaser in which the acquisition occurred, or within such further time as the Commissioner allows.

124ABA(4)   [Determination of entitlement to eligible cash bidding amount]  

Where at a particular time (in this subsection referred to as the relevant time ):

(a) a person is the holder of a qualifying interest or qualifying interests in relation to a cash bidding exploration permit; and

(b) the sum of:

(i) if the permit was granted to the person (whether or not the person holds the permit at the relevant time) - the permit cash bidding payment, or the aggregate of the permit cash bidding payments, as the case requires, paid before the relevant time in relation to the grant of the permit; and

(ii) in any case - all eligible cash bidding amounts (if any) specified in notices duly given (including at a time after the relevant time) under subsection (2), in relation to the acquisition before the relevant time, by the person of qualifying interests in relation to the permit,

exceeds the sum of all eligible cash bidding amounts (if any) specified in notices duly given (including at a time after the relevant time) under subsection (2) in relation to the acquisition, before the relevant time, from the person of qualifying interests in relation to the permit,

the person shall be taken to have at the relevant time in relation to the permit an entitlement to an eligible cash bidding amount equal to the amount of the excess referred to in paragraph (b).

124ABA(4A)   [Interpretation]  

In this section:

(a) a reference to the Petroleum Act includes a reference to a corresponding law of a State or the Northern Territory; and

(b) a reference to a specified provision or provisions of the Petroleum Act includes a reference to the corresponding provision or provisions of the corresponding law of a State or the Northern Territory.

124ABA(5)   [Production licence, retention lease, qualifying interest re exploration permit]  

For the purposes of this section:

(a) a production licence is related to an exploration permit if:

(i) because of the grant of the production licence, the exploration permit ceases to be in force in respect of:

(A) in the case of a production licence under Part III of the Petroleum Act - the block or blocks in respect of which the production licence is granted; or

(B) in any other case - the whole or part of the area in respect of which the production licence is granted; or

(ii) because of the grant of the production licence, a retention lease that is related to the exploration permit ceases to be in force in respect of:

(A) in the case of a production licence under Part III of the Petroleum Act - a block or blocks in respect of which a production licence is granted; or

(B) in any other case - the whole or part of the area in respect of which the production licence is granted;

(b) a retention lease is related to an exploration permit if, because of the grant of the retention lease, the exploration permit ceases to be in force in respect of:

(i) in the case of a retention lease under Part III of the Petroleum Act - the block or blocks in respect of which the retention lease is granted; or

(ii) in any other case - the whole or part of the area in respect of which the retention lease is granted;

(c) where an exploration permit or a retention lease (in this paragraph referred to respectively as the original permit and the original lease ) is renewed, the renewed permit or renewed lease shall be taken to be a continuation of the original permit or original lease notwithstanding that the renewal may not have been granted in respect of all of the blocks or other area in respect of which the original permit or original lease was granted; and

(d) a person shall be taken to have a qualifying interest in relation to an exploration permit if the person is the holder of the permit or a retention lease that is related to the permit, or of an interest in the permit or such a lease.

124ABA(6)   [Definitions]  

In this section:

block
has the same meaning as in the Petroleum Act.

cash bidding exploration permit
means an exploration permit in respect of which a permit cash bidding payment is or was made.

exploration permit
means:

(a) an exploration permit for petroleum under Part III of the Petroleum Act; or

(b) any permit, licence, lease or other authority (other than a production licence) that:

(i) is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii) authorises exploration or prospecting for petroleum, whether or not it also authorises other things.

licence cash bidding payment
means:

(a) any of the following amounts paid on or after 15 January 1986 in respect of the grant of a production licence, if the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations:

(i) a deposit referred to in paragraph 48(1)(b) of the Petroleum Act;

(ii) an amount paid as mentioned in paragraph 50(b) of the Petroleum Act;

(iii) an instalment paid by the registered holder of the production licence under:

(A) an agreement entered into under section 109 of the Petroleum Act; or

(B) subsection 109(4) of that Act; or

(b) a deposit referred to in paragraph 48(1)(b) of the Petroleum Act that was paid before 15 January 1986 in respect of the grant of a production licence, where none of the balance referred to in paragraph 50(b) of the Petroleum Act was paid before that date; or

(c) an amount paid for the grant of a production licence (other than one granted under Part III of the Petroleum Act), if:

(i) the licence was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(ii) the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the production licence; and

(iii) the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations.

permit cash bidding payment
means:

(a) any of the following amounts paid on or after 15 January 1986 in respect of the grant of an exploration permit, if the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations:

(i) an amount referred to in paragraph 22B(5)(b) of the Petroleum Act;

(ii) a deposit referred to in paragraph 24(1)(b) of the Petroleum Act;

(iii) an amount paid as mentioned in paragraph 27(b) of the Petroleum Act;

(iv) an instalment paid by the registered holder of the exploration permit under:

(A) an agreement entered into under section 109 of the Petroleum Act; or

(B) subsection 109(4) of that Act; or

(b) a deposit referred to in paragraph 24(1)(b) of the Petroleum Act that was paid before 15 January 1986 in respect of the grant of an exploration permit, where none of the balance referred to in paragraph 27(b) of the Petroleum Act was paid before that date; or

(c) an amount paid for the grant of an exploration permit (other than one issued under Part III of the Petroleum Act), if:

(i) the permit was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(ii) the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the exploration permit; and

(iii) the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations.

Petroleum Act
means the Petroleum (Submerged Lands) Act 1967 .

production licence
means:

(a) a production licence for petroleum under Part III of the Petroleum Act; or

(b) any permit, licence, lease or other authority that:

(i) is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii) authorises the carrying on of mining operations for the extraction (other than merely by taking samples) of petroleum from its natural site, whether or not it also authorises other things.

qualifying cash bidding payment

retention lease
means:

(a) a retention lease under Part III of the Petroleum Act; or

(b) any permit, licence (other than a production licence), lease or authority in relation to an area that:

(i) is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii) is only permitted to be granted to a person who is the holder of, or of an interest in, an exploration permit, or retention lease, in relation to the area.

124ABA(7)   [Application of section in relation to foreign law]  

Where:

(a) a law of a foreign country is declared by the regulations to contain provisions equivalent to those of Divisions 2 and 3 of Part III of the Petroleum Act; and

(b) the Commissioner considers that, if the preceding provisions of this section had applied in relation to the law of the foreign country in the same way, with appropriate modifications, as they apply in relation to Divisions 2 and 3 of Part III of the Petroleum Act, the taxpayer would have been taken by this section to have incurred an amount of expenditure of a capital nature at a particular time;

then the taxpayer is taken by this section to have incurred that amount of expenditure at that time.