INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 75AA   DEDUCTION FOR CAPITAL EXPENDITURE INCURRED IN ESTABLISHING GRAPE VINES  

75AA(1AA)   [No application 1997/98 income 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-D of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for expenditure in respect of the establishment of a grape vine (including expenditure incurred before the 1997-98 year of income - see Subdivision 387-D of the Income Tax (Transitional Provisions) Act 1997 ).

75AA(1A)   [Commercial debt forgiveness]  

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

75AA(1)   Deduction for qualifying expenditure.  

If:

(a) there is an amount of qualifying expenditure in respect of the establishment of a grape vine; and

(b) at any time during a year of income, a taxpayer was the owner of the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;

the amount worked out using the formula set out in subsection (2) is allowable as a deduction to the taxpayer for the year of income.

75AA(2)   Subsection (1) formula.  

The formula mentioned in subsection (1) is:

0.25     ×

Qualifying days in year of income Days in year of income

×

Qualifying expenditure

where:

``Qualifying days in year of income'' means the number of whole days in the year of income when the taxpayer owned the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;

``Days in year of income'' means the number of days in the year of income;

``Qualifying expenditure'' means the amount of qualifying expenditure.

75AA(3)   4-year limit for write-off.  

For the purposes of determining the amount of the deduction allowable to a taxpayer under subsection (1) in respect of an amount of qualifying expenditure in respect of the establishment of a grape vine, the taxpayer is taken not to have used the vine for the purpose of gaining or producing assessable income at any time after the end of the period of 4 years beginning on the day on which the vine was established.

75AA(4)   Qualifying expenditure.  

If:

(a) a person has incurred expenditure of a capital nature wholly or partly in respect of the establishment of a grape vine in Australia for use in a business of primary production; and

(b) the expenditure was incurred on or after 1 July 1993;

then, for the purposes of this section, so much of the amount of the expenditure as is attributable to the establishment of the vine is taken to be an amount of qualifying expenditure in respect of the establishment of the vine.

75AA(5)   Exclusion of expenditure incurred in draining or clearing land.  

A reference in this section to capital expenditure in respect of the establishment of a grape vine does not include a reference to expenditure incurred in:

(a) draining swamp or low-lying land; or

(b) clearing land.

75AA(6)   Destruction of grape vine.  

If:

(a) there is an amount of qualifying expenditure in respect of the establishment of a grape vine; and

(b) during a year of income, the vine is destroyed; and

(c) immediately before the destruction, a taxpayer owned the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;

then:

(d) if an amount (the ``recoverable amount'' ) was or is received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction - so much of the amount worked out using the formula set out in subsection (7) as exceeds the recoverable amount is allowable as a deduction to the taxpayer for the year of income; or

(e) in any other case - the amount worked out using the formula set out in subsection (7) is allowable as a deduction to the taxpayer for the year of income.

75AA(7)   Subsection (6) formula.  

The formula mentioned in subsection (6) is:

Qualifying expenditure   −   Notional deductions

where:

``Qualifying expenditure'' means the amount of the qualifying expenditure in respect of the establishment of the grape vine;

``Notional deductions'' means the deduction, or the total of the deductions; that would have been allowable to the taxpayer under subsection (1) in respect of the qualifying expenditure if it were assumed, that at all times during the period:

(a) beginning at the time when the vine was established; and

(b) ending at the time when the vine was destroyed;

the taxpayer had owned the vine and had used it in a business of primary production for the purpose of gaining or producing assessable income.

75AA(7A)   [Subsec (8) application limited]  

Subsection (8) does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section 20-25 of the Income Tax Assessment Act 1997 .

Note:

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

75AA(8)   Recoupment of expenditure.  

This section does not apply, and is taken never to have applied, to expenditure incurred by a person if:

(a) the person, whether before or after the commencement of this subsection, receives, or becomes entitled to receive a recoupment of, or grant in respect of, the expenditure; and

(b) the amount of the recoupment or the grant is not, and will not be, included in the person's assessable income of any year of income.

75AA(9)   Dissection of recoupment.  

For the purposes of subsection (8), if a person receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of, or a grant in respect of, expenditure, then so much of that amount as is reasonable is taken to be a recoupment of, or grant in respect of, that expenditure, as the case requires.

75AA(10)   Amendment of assessments.  

Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to subsection (8) or (9).

75AA(11)   Crown leases - lessees deemed to own vines.  

For the purposes of this section, if:

(a) a taxpayer is the lessee of land under a Crown lease (within the meaning of section 54AA ); and

(b) a grape vine is affixed to the land; and

(c) the taxpayer, or a prior holder of the Crown lease, planted the grape vine; and

(d) apart from this section, the taxpayer is not the owner of the vine;

the taxpayer is taken to be the owner of the grape vine instead of any other person.

75AA(12)   ``Person'' includes a partnership or trustee.  

A reference in this section to a person includes a reference to a partnership or a person in the capacity of a trustee.