INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART XII - DROUGHT INVESTMENT ALLOWANCE  

Division 2 - Primary producer deduction  

Subdivision A - Entitlement to deduction  

SECTION 631   $5,000 LIMIT ON TOTAL DEDUCTIONS  

631(1)   Application of the limit.  

The deduction, or the total of the deductions, allowable to the taxpayer under this Division for one or more items of drought mitigation property for a year of income is limited to $5,000.

631(2)   Proportionate allocation of limit.  

If:

(a) because of subsection (1), only a proportion (the eligible proportion ) of a deduction or of the total deductions for expenditure of the taxpayer on one or more items of drought mitigation property is allowable; and

(b) it is necessary for the purpose of any other provision (e.g. section 633 or 635 ) to know:

(i) how much of the deduction for a particular item was allowable; or

(ii) which expenditure on a particular item was taken into account in working out the deduction allowable for that item;

then:

(c) only the eligible proportion of the deduction for the particular item is taken to have been allowable; and

(d) only the eligible proportion of each dollar of the expenditure on the particular item was taken into account in working out the deduction.

631(3)   Example for purposes of proportionate allocation of limit.  

An example for the purposes of subsection (2) is where, of a total of $15,000 in deductions on 2 items ( item 1 and item 2 ), only $5,000 (i.e. one third) was allowable because of subsection (1). If the deductions were:

(a) $9,000 (expenditure of $90,000) for item 1; and

(b) $6,000 (expenditure of $60,000) for item 2;

then:

(c) only one third of the deduction for item 1 (i.e. $3,000) is taken to have been allowable, and one third of every dollar of the $90,000 expenditure was taken into account in working out the $3,000 deduction; and

(d) only one third of the deduction for item 2 (i.e. $2,000) is taken to have been allowable, and one third of every dollar of the $60,000 expenditure was taken into account in working out the $2,000 deduction.