Income Tax Assessment Act 1997
CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION
PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE
Division 40 - Capital allowances
View history note
Hide history noteNote: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
Subdivision 40-H - Capital expenditure that is immediately deductible
Operative provisions
SECTION 40-730 Deduction for expenditure on exploration or prospecting
40-730(1)
You can deduct expenditure you incur in an income year on * exploration or prospecting for * minerals, or quarry materials, obtainable by * mining and quarrying operations if, for that expenditure, you satisfy one or more of these paragraphs:
(a)
you carried on mining and quarrying operations;
(b)
it would be reasonable to conclude you proposed to carry on such operations;
(c)
you carried on a
*
business of, or a business that included, exploration or prospecting for minerals or quarry materials obtainable by such operations, and the expenditure was necessarily incurred in carrying on that business.
Note:
If Division 250 applies to you and an asset that is land:
40-730(2)
However, you cannot deduct expenditure under subsection (1) if it is expenditure on:
(a)
development drilling for
*
petroleum; or
(b)
operations in the course of working a mining property, quarrying property or petroleum field.
40-730(2A)
(Repealed by No 96 of 2014)
40-730(2B)
(Repealed by No 96 of 2014)
40-730(3)
Also, you cannot deduct expenditure under subsection (1) to the extent that it forms part of the *cost of a *depreciating asset.
Definitions
40-730(4)
Exploration or prospecting
includes:
(a)
for mining in general, and quarrying:
(i) geological mapping, geophysical surveys, systematic search for areas containing * minerals (except * petroleum) or quarry materials, and search by drilling or other means for such minerals or materials within those areas; and
(ii) search for ore within, or near, an ore-body or search for quarry materials by drives, shafts, cross-cuts, winzes, rises and drilling; and
(b)
for petroleum mining:
(i) geological, geophysical and geochemical surveys; and
(ii) exploration drilling and appraisal drilling; and
(c)
feasibility studies to evaluate the economic feasibility of mining minerals or quarry materials once they have been discovered; and
(d)
obtaining
*
mining, quarrying or prospecting information associated with the search for, and evaluation of, areas containing minerals or quarry materials.
(e)
(Repealed by No 96 of 2014)
40-730(5)
Minerals
includes
*
petroleum.
(a)
any naturally occurring hydrocarbon or naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or
(b)
any naturally occurring mixture of:
(i) one or more hydrocarbons, whether in a gaseous, liquid or solid state; and
(ii) one or more of the following: hydrogen sulphide, nitrogen, helium or carbon dioxide;
whether or not that substance has been returned to a natural reservoir.
40-730(7)
Mining and quarrying operations means:
(a)
mining operations on a mining property for extracting
*
minerals (except
*
petroleum) from their natural site; or
(b)
mining operations for the purpose of obtaining petroleum; or
(c)
quarrying operations on a quarrying property for extracting quarry materials from their natural site;
for the * purpose of producing assessable income.
40-730(7A)
(Repealed by No 96 of 2014)
40-730(7B)
(Repealed by No 96 of 2014)
40-730(8)
Mining, quarrying or prospecting information
is geological, geophysical or technical information that:
(a)
relates to the presence, absence or extent of deposits of
*
minerals or quarry materials in an area; or
(b)
is likely to help in determining the presence, absence or extent of such deposits in an area.
40-730(9)
(Repealed by No 96 of 2014)
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