INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 70A   COST OF MAINS ELECTRICITY CONNECTIONS  

70A(1AA)   [No deduction 1997/98 year onwards]  

A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.

Note:

Subdivision 387-E of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for capital expenditure on the connection of mains electricity facilities (including expenditure incurred before the 1997-98 year of income - see Subdivision 387-E of the Income Tax (Transitional Provisions) Act 1997 ).

70A(1A)   [Commercial debt forgiveness]  

This section has effect subject to Division 245 of Schedule 2C .

70A(1)   [Qualifying expenditure]  

Subject to this section, this section applies to expenditure of a capital nature incurred, after 25 May 1988 (other than under a contract entered into on or before that day) by a taxpayer being:

(a) the owner of land in Australia; or

(b) a lessee, tenant or other person having an interest in land in Australia,

on the connection of mains electricity facilities to that land where:

(c) at the time when the expenditure was incurred, the property in respect of which the expenditure was incurred was used, or installed ready for use and held in reserve, by the taxpayer or another person for, or in connection with, the provision of electricity for use, wholly or partly, in carrying on an assessable business on the land; or

(d) in a case to which paragraph (c) does not apply - the Commissioner is satisfied that, at the time when the expenditure was incurred, the taxpayer or another person intended to use the property in respect of which the expenditure was incurred for, or in connection with, the provision of electricity for use, wholly or partly, in carrying on an assessable business on the land at a time when the taxpayer was the owner, lessee or tenant or had an interest in the land, as the case may be.

70A(2)   [Exclusion of mining or petroleum operations]  

This section does not apply to expenditure of a capital nature incurred by a taxpayer in providing, or by way of contribution to the cost of providing, water, light or power for use on or access to or communication with the site of prescribed mining operations within the meaning of Division 10 or prescribed petroleum operations within the meaning of Division 10AA .

70A(3)   [Deduction allowable]  

Subject to this section, where a taxpayer incurs expenditure to which this section applies, an amount equal to 10% of that expenditure is an allowable deduction in the assessment of the taxpayer in respect of income of:

(a) the year of income in which the expenditure is incurred; and

(b) each of the succeeding 9 years of income.

70A(4)   [When deduction not allowable]  

Where -

(a) a deduction has been allowed, or would but for this subsection be allowable, under this section from the assessable income of a taxpayer of a year of income in respect of expenditure incurred on the connection of mains electricity facilities to land, being expenditure in relation to which this section would not apply but for paragraph (1)(d); and

(b) at no time during the period of 12 months after the time when the property in respect of which the expenditure was incurred is first used for, or in connection with, the provision of electricity to the land, is that property used, or installed ready for use and held in reserve, for, or in connection with, the provision of electricity for use in the carrying on of an assessable business on the land,

the deduction shall be deemed not to have been allowable, or not to be allowable, as the case may be.

70A(4A)   [Application of para (5)(a) limited]  

Paragraph (5)(a) does not apply to an amount by which a taxpayer is recouped in the 1997-98 or a later year of income (including an amount by which the taxpayer is taken because of paragraph (5)(b) to be recouped in that year of income).

Note:

Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.

70A(5)   [Year's recoupment amount]  

Where the taxpayer is recouped (whether by a government body or otherwise) in a year of income in respect of the whole or part of an amount of expenditure to which this section applies, the following provisions have effect:

(a) the assessable income of the taxpayer of the year of income shall include so much of the total amount (in this subsection called the ``year's recoupment amount'' ) by which the taxpayer is recouped in that year (including by virtue of any application of paragraph (b)) as does not exceed the amount (in this subsection called the ``overall net deduction'' ) ascertained in accordance with the formula:

Total deductions   −   Total assessments

where:

Total deductions is the sum of all deductions allowed or allowable under this section from the assessable income of the taxpayer of the year of income, and of all preceding years of income, in relation to the expenditure;

Total assessments is the sum of all amounts included under this section in the assessable income of the taxpayer of all preceding years of income in relation to the expenditure;

(b) if the year's recoupment amount exceeds the overall net deduction - the amount of the excess shall, for the purposes of this section, be taken to be an amount in respect of which the taxpayer is recouped (whether by a government body or otherwise) in the next following year of income in respect of a part of an amount of expenditure to which this section applies.

70A(6)   [Consideration on disposal or transfer]  

For the purposes of subsection (5), any consideration received by a taxpayer in respect of the disposal or transfer of the taxpayer's right to be recouped in respect of any expenditure to which this section applies shall be taken to be an amount recouped by the taxpayer in respect of that expenditure.

70A(7)   [Recoupment - interests of partners]  

The reference in subsection (6) to the taxpayer's right to be recouped in respect of any expenditure to which this section applies includes a reference to the interest of the taxpayer in a partnership to the extent to which the interest includes a right to be recouped in respect of any such expenditure.

70A(8)   [Unapportioned recoupment]  

Where a taxpayer receives an amount that constitutes to an unspecified extent a recoupment of expenditure to which this section applies, the Commissioner may, for the purposes of subsection (5), determine the extent to which the amount constitutes a recoupment of that expenditure.

70A(9)   [No double deduction]  

Where the whole or part of any expenditure to which this section applies has been allowed or is allowable as a deduction under this section in an assessment of a taxpayer of any year of income, no amount shall, in respect of the whole or any part of that expenditure, be an allowable deduction or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section, in any assessment of any taxpayer or in calculating in accordance with section 90 the net income of any partnership or any partnership loss in respect of any year of income.

70A(10)   [Partnership]  

For the purposes of this Act, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer:

(a) each partner, instead of the partnership, shall be taken to have incurred:

(i) so much of that expenditure as the partners have agreed is to be borne by that partner; or

(ii) if the partners have not so agreed - a proportion of that expenditure equal to the proportion of the net income or partnership loss of the partnership of the year of income in which the expenditure was incurred that is represented by the individual interest of that partner in the net income or partnership loss; and

(b) if the partnership is recouped in respect of the whole or part of the expenditure that a partner was taken by paragraph (a) to have incurred - the partner, instead of the partnership, shall be taken to have been so recouped.

70A(11)   [Interpretation]  

In this section -

(a) a reference to the connection to any land of mains electricity facilities is a reference to -

(i) the connection of mains electricity cables from a point on the land or outside the land to a point on the land at which the consumption of electricity supplied through those cables to the land is to be metered;

(ii) the provision or installation of mains electricity metering equipment for use in connection with the supply of electricity to the land through mains electricity cables;

(iii) the provision or installation of equipment that is for use directly in connection with the supply of electricity to the land through mains electricity cables to a point on the land at which the consumption of electricity supplied through those cables to the land is metered; and

(iv) any work undertaken to increase the amount of electricity that may be supplied to the land through mains electricity cables to a point on the land at which the consumption of electricity supplied through those cables is metered and any consequential modification or replacement of mains electricity metering equipment or other equipment that is for use directly in connection with the supply of electricity to that point,

but does not include a reference to the connection of mains electricity cables, the provision or installation of equipment or any work undertaken in the course of replacing or re-locating mains electricity cables or any equipment unless the connection of the mains electricity cables, the provision or installation of the equipment or the undertaking of the work is for the purpose of obtaining an increase in the amount of electricity that can be supplied to a point on the land;

(b) a reference to expenditure incurred on the connection to any land of mains electricity facilities includes a reference to expenditure incurred by way of contribution to the cost of a project consisting of the connection of mains electricity facilities to that land and to other land;

(c) a reference to mains electricity metering equipment is a reference to equipment designed to measure the amount of electricity supplied to any place through mains electricity cables;

(d) a reference, in relation to expenditure incurred on the connection to any land of mains electricity facilities, to the property in respect of which the expenditure was incurred is a reference to the mains electricity cables or the equipment, or the mains electricity cables and the equipment, as the case requires, in respect of which the expenditure was incurred;

(e) a reference to the carrying on of an assessable business is a reference to the carrying on of a business for the purpose of producing assessable income; and

(f) a reference to a person having an interest in land includes a reference to a share-farmer carrying on a business on the land.