INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10D - Deductions for capital expenditure on certain buildings and structural improvements  

SECTION 124ZG   QUALIFYING EXPENDITURE  

124ZG(1)   [Building, etc, commenced after 19 July 1982 and before 18 July 1985]  

Subject to this section, where:

(a) a person has incurred expenditure of a capital nature in respect of the construction of a building in Australia or in respect of the construction of an extension, alteration or improvement to a building in Australia;

(b) at the time when that expenditure was incurred:

(i) the building or the extension, alteration or improvement, as the case may be, was to be owned or leased by that person; or

(ii) a part only of the building or of the extension, alteration or improvement, as the case may be, was to be owned or leased by that person;

(c) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 19 July 1982 and before 18 July 1985 and construction of the building or of that extension, alteration or improvement, as the case may be, has been completed; and

(d) at the time of completion of construction of the building, or of the extension, alteration or improvement, as the case may be:

(i) in a case to which subparagraph (b)(i) applies:

(A) the building, or the extension, alteration or improvement, as the case may be, was for use by that person for the purpose of producing income or was for disposal by that person to another person for use by that other person for the purpose of producing income; or

(B) a part (in this sub-subparagraph referred to as the relevant part ) of the building, or of the extension, alteration or improvement, as the case may be, was for use or disposal by that person as described in sub-subparagraph (A); or

(ii) in a case to which subparagraph (b)(ii) applies:

(A) the whole (in this sub-subparagraph referred to as the relevant part ) of the part of the building, extension, alteration or improvement, as the case may be, to which that subparagraph applies was for use or disposal by that person as described in sub-subparagraph (i)(A); or

(B) a part (in this sub-subparagraph referred to as the relevant part ) of the part of the building, extension, alteration or improvement, as the case may be, to which that subparagraph applies was for use or disposal by that person as described in sub-subparagraph (i)(A),

then, for the purposes of this Division:

(e) in a case to which sub-subparagraph (d)(i)(A) applies - the amount of the capital expenditure referred to in paragraph (a) shall be taken to be an amount of qualifying expenditure in respect of the building; and

(f) in a case to which sub-subparagraph (d)(i)(B), (ii)(A) or (ii)(B) applies - so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the relevant part referred to in whichever of those sub-subparagraphs is applicable shall be taken to be an amount of qualifying expenditure in respect of the building.

124ZG(2)   [Uses not for the purpose of producing income]  

For the purposes of paragraph (1)(d):

(a) a building, or an extension, alteration or improvement to a building; or

(b) any part of a building, or of an extension, alteration or improvement to a building,

shall not be taken to be for use by a person for the purpose of producing income if the building, extension, alteration or improvement, or the part of the building, extension, alteration or improvement, as the case may be, was for use (whether by that person or by another person or persons) wholly or principally:

(c) for, or in association with, residential accommodation; or

(d) for exhibition or display in connection with:

(i) the sale of the whole or any part of that or any other building; or

(ii) the lease of the whole or any part of that or any other building for use (whether by that person or by another person or persons) wholly or principally for, or in association with, residential accommodation.

124ZG(2A)   [Building, etc, commenced after 17 July 1985]  

Subject to this section, where:

(a) a person has incurred expenditure of a capital nature in respect of the construction of a building, or in respect of the construction of an extension, alteration or improvement to a building;

(b) at the time when that expenditure was incurred:

(i) the building, or the extension, alteration or improvement, as the case may be, was to be owned or leased by that person; or

(ii) a part only of the building, or of the extension, alteration or improvement, as the case may be, was to be owned or leased by that person;

(c) the building, or the extension, alteration or improvement, as the case may be, commenced to be constructed after 17 July 1985 and construction of the building, or of that extension, alteration or improvement, as the case may be, has been completed; and

(d) at the time of completion of construction of the building, or of the extension, alteration or improvement, as the case may be:

(i) in a case to which subparagraph (b)(i) applies:

(A) the building, or the extension, alteration or improvement, as the case may be, was for use by that person for the purpose of producing income, was for disposal by that person to another person for use by that other person for the purpose of producing income, was for residential use, or, in the case of a building, or an extension, alteration or improvement, that commenced to be constructed on or after 21 November 1987, was for use for the purpose of the carrying on by or on behalf of that person of research and development activities or was for disposal by that person to another person for use for the purpose of the carrying on by or on behalf of that other person of research and development activities; or

(B) a part (in this sub-subparagraph referred to as the relevant part ) of the building, or of the extension, alteration or improvement, as the case may be, was for use by that person, or disposal by that person, as described in sub-subparagraph (A), was for residential use, or, in the case of a building, or an extension, alteration or improvement, that commenced to be constructed on or after 21 November 1987, was for use for the purpose of the carrying on by or on behalf of that person of research and development activities or was for disposal by that person to another person for use for the purpose of the carrying on by or on behalf of that other person of research and development activities; or

(ii) in a case to which subparagraph (b)(ii) applies:

(A) the whole (in this sub-subparagraph referred to as the relevant part ) of the part of the building, extension, alteration or improvement, as the case may be, to which that subparagraph applies was for use by that person, or disposal by that person, as described in sub-subparagraph (i)(A), was for residential use, or, in the case of a building, or an extension, alteration or improvement, that commenced to be constructed on or after 21 November 1987, was for use for the purpose of the carrying on by or on behalf of that person of research and development activities or was for disposal by that person to another person for use for the purpose of the carrying on by or on behalf of that other person of research and development activities; or

(B) a part (in this sub-subparagraph referred to as the relevant part ) of the part of the building, extension, alteration or improvement, as the case may be, to which that subparagraph applies was for use by that person, or disposal by that person, as described in sub-subparagraph (i)(A), was for residential use, or, in the case of a building, or an extension, alteration or improvement, that commenced to be constructed on or after 21 November 1987, was for use for the purpose of the carrying on by or on behalf of that person of research and development activities or was for disposal by that person to another person for use for the purpose of the carrying on by or on behalf of that other person of research and development activities,

then, for the purposes of this Division:

(e) in a case to which sub-subparagraph (d)(i)(A) applies - the amount of the capital expenditure referred to in paragraph (a) shall be taken to be an amount of qualifying expenditure in respect of the building; and

(f) in a case to which sub-subparagraph (d)(i)(B), (ii)(A) or (ii)(B) applies - so much of the amount of the capital expenditure referred to in paragraph (a) as is attributable to the relevant part referred to in whichever of those sub-subparagraphs is applicable shall be taken to be an amount of qualifying expenditure in respect of the building.

124ZG(2B)   [ residential use ]  

For the purposes of paragraph (2A)(d), a building, extension, alteration or improvement, or a part of a building, extension, alteration or improvement, shall be taken to be for residential use if, and only if, the building, extension, alteration or improvement, or the part of the building, extension, alteration or improvement, as the case may be, is for use by a person or persons wholly or principally for, or in association with, residential accommodation.

124ZG(2C)   [Qualifying hotel, apartment expenditure]  

If there is an amount of post-26 February 1992 qualifying hotel expenditure, or post-26 February 1992 qualifying apartment expenditure, in respect of a building (within the meaning of Division 10C ), no part of the amount of qualifying hotel expenditure, or qualifying apartment expenditure, as the case may be, is taken to be qualifying expenditure in respect of a building.

124ZG(3)   [Depreciation allowable under other sections]  

References in subsections (1) and (2A) to expenditure of a capital nature incurred in respect of the construction of a building or of an extension, alteration or improvement to a building shall be read as not including references to expenditure in respect of any property in respect of which depreciation is allowable, or would be allowable if the property were for use for the purpose of producing assessable income, under section 54 or expenditure in respect of which a deduction is allowable, or would be allowable if the property were for use for the purpose of producing assessable income, under section 73A , 75B , 75D , 124F or 124JA or Division 10 , 10AAA or 10AA or expenditure in respect of which a deduction is allowable, or would be allowable if the property were for use for the purpose of the carrying on of research and development activities, under section 73B .

124ZG(4)   [Expenditure to acquire relevant building]  

Where there is an amount of qualifying expenditure in respect of a building or part of a building (which building or part of a building is in this subsection referred to as the relevant building ), no part of that amount, or of any amount incurred by a person in acquiring any part of the relevant building to which that amount of qualifying expenditure is attributable, shall be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, from the assessable income of any person of any year of income under a provision of this Act other than this Division.

124ZG(5)   [Heritage conservation expenditure]  

References in subsection (2A) to expenditure of a capital nature incurred in respect of the construction of a building, or of an extension, alteration or improvement to a building, are to be read as not applying to expenditure that is eligible heri tage conservation expenditure within the meaning of Subdivision AAD of Division 17 .