INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10 - Mining and quarrying  

Subdivision A - General mining  

SECTION 122A   ALLOWABLE CAPITAL EXPENDITURE  

122A(1)   [Allowable capital expenditure]  

For the purposes of this Subdivision, allowable capital expenditure of a taxpayer is expenditure of a capital nature incurred by the taxpayer, being:

(a) expenditure in carrying on prescribed mining operations, including expenditure:

(i) in preparing a site for such operations;

(ii) on buildings, other improvements or plant necessary for the carrying on by the taxpayer of such operations;

(iii) in providing, or by way of contribution to the cost of providing, water, light or power for use on, or access to or communications with, the site of prescribed mining operations carried on, or to be carried on, by the taxpayer; or

(iv) on housing and welfare; or

(b) expenditure on plant for use primarily and principally in the treatment of minerals obtained from the carrying on by the taxpayer of prescribed mining operations; or

(c) expenditure on buildings or plant for use directly in connexion with the operation or maintenance of plant referred to in paragraph (b), or buildings or other improvements for use directly in connexion with the storage (whether before or after treatment) of minerals in relation to the operation of such plant; or

(d) expenditure on acquiring a mining or prospecting right or mining or prospecting information from another person, to the extent only of the amount of the expenditure that is specified in a notice under section 122B duly given to the Commissioner by the taxpayer and that other person; or

(da) expenditure that the taxpayer is taken to have incurred by section 122BA ; or

(e) where the taxpayer is a company the sole or principal business, or proposed business, of which is the carrying on of prescribed mining operations or the providing of capital (whether by investment in shares or otherwise) to companies the sole or principal business, or proposed business, of which is the carrying on of prescribed mining operations:

(i) expenditure of the company in respect of the formation and incorporation of the company; and

(ii) so much of the expenditure incurred by the company in issuing, or making calls on, shares in the company as the Commissioner thinks reasonable having regard to the extent to which the moneys received by the company in relation to the issue of the shares, or the making of the calls, has been or, in the opinion of the Commissioner, will be, expended on mining or prospecting outgoings as defined in section 77D as in force immediately before its repeal by the Taxation Laws Amendment Act (No. 3) 1989 .

122A(1A)   [Non-applicability of subsec (1)(e)]  

Paragraph (1)(e):

(a) does not apply in relation to expenditure incurred after 17 September 1974 unless the expenditure was incurred in pursuance of a contract made on or before 17 September 1974; and

(b) does not apply in relation to expenditure incurred after 30 June 1976.

122A(1B)   [Application of subsec (1)]  

Subsection (1) does not apply to expenditure on property (being plant or articles for the purposes of section 54 ) unless:

(a) either of the following conditions is satisfied:

(i) the property was acquired by the taxpayer under a contract entered into on or before 25 May 1988;

(ii) the property was constructed by the taxpayer and:

(A) the construction commenced on or before 25 May 1988; or

(B) the construction was under a contract entered into on or before 25 May 1988, or under 2 or more contracts any of which was entered into on or before that date; and

(b) before 1 July 1991, the property:

(i) was used by the taxpayer for the purpose of producing assessable income; or

(ii) was installed ready for use for that purpose and held in reserve by the taxpayer.

122A(1C)   [Amendment of assessments]  

Notwithstanding section 170 , the Commissioner may at any time amend an assessment for the purpose of giving effect to subsection (1B) of this section.

122A(2)   [Expenditure not allowable capital expenditure]  

Without extending, by implication, the operation of subsection (1), it is declared that the expenditure referred to in that subsection does not include expenditure incurred by the taxpayer on or in relation to:

(a) ships, railway rolling-stock or road vehicles, or railway lines, roads, pipelines or other facilities, for use wholly or partly for the purpose of the transport of minerals or products of minerals, other than transport wholly within the site of prescribed mining operations carried on by the taxpayer;

(b) works carried out in connexion with, or buildings or other improvements or plant constructed or acquired for use in connexion with, the establishment, operation or use of a port or other facilities for ships; or

(c) an office building that is not situated at or adjacent to the site of prescribed mining operations carried on by the taxpayer.