Income Tax (Transitional Provisions) Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-B - Core provisions  

SECTION 40-77   Mining, quarrying or prospecting rights or information held before 1 July 2001  

40-77(1)    
Division 40 of the new Act does not apply to a mining, quarrying or prospecting right that you started to hold before 1 July 2001.

Note:

If you incur expenditure relating to assets of that kind, you cannot deduct it under Division 40. However, the expenditure may be taken into account in calculating a capital gain or capital loss under Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 .

40-77(1A)    

Division 40 of the new Act does not apply to a renewal or extension of a mining, quarrying or prospecting right that you started to hold before 1 July 2001.

40-77(1B)    

Subsection (1) applies to a mining, quarrying or prospecting right (the new right ) that you start to hold on or after 1 July 2001 as if you had started to hold the new right before that day if:

(a) you started to hold another mining, quarrying or prospecting right before that day; and

(b) the other right ends on or after that day; and

(c) the new right and the other right relate to the same area, or any difference in area is not significant.

40-77(1C)    

Division 40 of the new Act does not apply to a mining, quarrying or prospecting right if:

(a) a company (the original holder ) started to hold the right before 1 July 2001; and

(b) the right is transferred after that day to another company where:

(i) the other company is a member of the same wholly-owned group as the original holder and was a member of that group just before that day; and

(ii) the right was held in the period between that day and the time of the transfer by a company or companies that were members of that group on that day and at the time of the transfer.

40-77(1D)    

Division 40 of the new Act does not apply to an interest in a mining, quarrying or prospecting right that you started to hold on or after 1 July 2001 if:

(a) you acquired the interest under an interest realignment arrangement; and

(b) the interest was acquired in exchange for one or more other interests in other mining, quarrying or prospecting rights all of which you had started to hold before 1 July 2001.

40-77(1E)    

If:

(a) you acquired, under an interest realignment arrangement, an interest (a new interest ) in a mining, quarrying or prospecting right; and

(b) the interest was acquired in exchange for one or more other interests ( old interests ) in other mining, quarrying or prospecting rights; and

(c) you started to hold some of the old interests before 1 July 2001;

Division 40 of the new Act applies to the new interest only to the extent that the new interest was acquired in exchange for the old interests that you started to hold on or after 1 July 2001.

40-77(2)    
If, after 30 June 2001:

(a) you dispose of a mining, quarrying or prospecting right that you started to hold before 1 July 2001 to an associate of yours (except a company that is a member of the same wholly-owned group); or

(b) you enter into an arrangement in relation to such a right under which you maintain, in essence, the economic ownership of the right but not its legal ownership;

the cost of the right to the purchaser is limited, for the purposes of Division 40 of the new Act, to a maximum of the costs that would have been deductible for the right under Division 330 of the former Act.

40-77(3)    
An amount that would be included in your assessable income under section 15-40 or subsection 40-285(1) of the new Act in respect of mining, quarrying or prospecting information you started to hold before 1 July 2001 is reduced (but not below zero) by so much of the capital cost of acquiring the information that you incurred before that day and that:

(a) you have not deducted and cannot deduct (either immediately or over time) under the former Act; and

(b) did not form part of allowable capital expenditure under the former Act; and

(c) did not entitle you to a deduction under section 330-235 of the former Act;

but only to the extent that you have not already applied the amount under this section.

40-77(4)    

Your assessable income includes an amount if:

(a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and

(b) you have deducted or can deduct an amount for it under Subdivision 330-C in relation to Subdivision 330-D or 330-E of the former Act.

The amount included is the amount you have deducted or can deduct.

40-77(5)    

Your assessable income also includes an amount if:

(a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and

(b) because of section 40-35 or 40-38 of this Act, you have deducted or can deduct an amount for a notional asset that relates to expenditure on the right under Division 40 of the new Act.

The amount included is the amount you have deducted or can deduct.

40-77(6)    

Division 110 of the new Act applies as if an amount included in assessable income under subsection (4) or (5) of this section were the reversal of a deduction under a provision of the new Act outside Parts 3-1 and 3-3 and Division 243 .

40-77(7)    

An amount that would be included in your assessable income under subsection 40-285(1) of the new Act in respect of a mining, quarrying or prospecting right is reduced by an amount worked out under subsection (8) if:

(a) you acquired the right from an associate (except a company that is a member of the same wholly-owned group) on or after 1 July 2001; and

(b) the associate started to hold the right before that day.

40-77(8)    

The amount is reduced (but not below zero) by the difference between the capital cost that you incurred after that day and the amount to which the cost of the right is limited under subsection (2) of this section.