INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10 - Mining and quarrying  

Subdivision A - General mining  

SECTION 122BA   ALLOWABLE CAPITAL EXPENDITURE IN RESPECT OF CASH BIDDING PAYMENTS TO ACQUIRE EXPLORATION OR PROSPECTING AUTHORITIES OR MINING AUTHORITIES  

122BA(1)   Summary of section.  

This section provides for certain exploration or prospecting cash bidding payments and mining cash bidding payments to be capital expenditure incurred by a taxpayer for the purposes of this Division.

122BA(2)   Mining cash bidding payments.  

Each mining cash bidding payment paid by a taxpayer is, for the purposes of this Division, expenditure of a capital nature incurred by the taxpayer:

(a) if the amount is paid before the grant of the mining authority concerned - at the time of the grant; and

(b) in any other case - at the time the payment is made.

122BA(3)   Exploration or prospecting cash bidding payments made when mining authority has been granted.  

If:

(a) a taxpayer makes an exploration or prospecting cash bidding payment in relation to the grant of an exploration or prospecting authority; and

(b) the payment is made at or after the time of the grant of a mining authority that is related to the exploration or prospecting authority;

the amount of the payment is, for the purposes of this Division, expenditure of a capital nature incurred by the taxpayer at the time of payment.

122BA(4)   Exploration or prospecting cash bidding payments made before mining authority has been granted.  

If:

(a) a mining authority is granted; and

(b) it is the first or only mining authority that is related to a particular cash bidding exploration or prospecting authority; and

(c) immediately before the grant of the mining authority a taxpayer who has a qualifying interest or qualifying interests in relation to the exploration or prospecting authority also has an entitlement to an eligible cash bidding amount in relation to the exploration or prospecting authority;

the taxpayer is taken for the purposes of this Division to have incurred, at the time the mining authority is granted, expenditure of a capital nature in relation to the qualifying interest or qualifying interests of an amount equal to the eligible cash bidding amount.

122BA(5)   Transfer of entitlement to an eligible cash bidding amount.  

If:

(a) at any time before the grant of the first or only mining authority that is related to a cash bidding exploration or prospecting authority, a person (the purchaser ) incurs expenditure in acquiring a qualifying interest in relation to the exploration or prospecting authority from another person (the vendor ); and

(b) the vendor has an entitlement to an eligible cash bidding amount in relation to the exploration or prospecting authority;

the purchaser and vendor may agree to transfer to the purchaser so much of the vendor's entitlement to the eligible cash bidding amount as is specified in the agreement.

122BA(6)   Form and content of agreement.  

An agreement under subsection (5) must:

(a) be in writing signed by or on behalf of the vendor and the purchaser; and

(b) specify as the amount of the entitlement that is to be transferred to the purchaser an amount that does not exceed:

(i) the expenditure incurred by the purchaser in acquiring the qualifying interest in relation to the exploration or prospecting authority;

reduced by:

(ii) any amount of that expenditure specified in an agreement previously made under subsection 122B(1) in relation to the acquisition; and

(c) be made not later than 2 months after the end of the year of income of the purchaser in which the acquisition occurred, or within such further time as the Commissioner allows.

122BA(7)   Definition of entitlement to an eligible cash bidding amount .  

If at a particular time (the test time ):

(a) a person is the holder of a qualifying interest or qualifying interests in relation to a cash bidding exploration or prospecting authority; and

(b) the sum of:

(i) if the exploration or prospecting authority was granted to the person (whether or not the person holds the authority at the test time) - the exploration or prospecting cash bidding payment, or the sum of the exploration or prospecting cash bidding payments, paid before the test time in relation to the grant of the authority; and

(ii) in any case - all amounts (if any) specified in agreements made (including at a time after the test time) under subsection (5) in relation to the acquisition by the person of qualifying interests in relation to the authority before the test time;

exceeds:

(iii) the sum of all amounts (if any) specified in agreements made (including at a time after the test time) under subsection (5) in relation to the acquisition from the person of qualifying interests in relation to the authority before the test time;

the person is taken to have at the test time in relation to the authority an entitlement to an eligible cash bidding amount equal to the amount of the excess referred to in paragraph (b).

122BA(8)   When a mining authority is related to an exploration or prospecting authority .  

A mining authority is related to an exploration or prospecting authority if:

(a) because of the grant of the mining authority, the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the mining authority is granted; or

(b) because of the grant of the mining authority, a retention authority that is related to the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the mining authority is granted.

122BA(9)   When a retention authority is related to an exploration or prospecting authority.  

A retention authority is related to an exploration or prospecting authority if, because of the grant of the retention authority, the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the retention authority is granted.

122BA(10)   Effect of renewal of authority.  

If an exploration or prospecting authority (the original authority ) or a retention authority (also the original authority ) is renewed, the renewed authority is taken to be a continuation of the original authority, even if the renewal is not granted in respect of all of the area in respect of which the original authority was granted.

122BA(11)   Definition of qualifying interest.  

A person has a qualifying interest in relation to an exploration or prospecting authority if the person is the holder of, or of an interest in, the authority or a retention authority that is related to it.

122BA(12)   Definitions.  

In this section:

cash bidding exploration or prospecting authority
means an exploration or prospecting authority in respect of which an exploration or prospecting cash bidding payment is or was made.

exploration or prospecting authority
means any permit, licence, lease or other authority (other than a mining authority) that:

(a) is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b) authorises exploration or prospecting for minerals other than petroleum, whether or not it also authorises other things.

exploration or prospecting cash bidding payment
means an amount paid for the grant of an exploration or prospecting authority, if:

(a) the authority was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(b) the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the exploration or prospecting authority; and

(c) the amount is incurred in carrying on prescribed mining operations or for the purpose of exploring or prospecting for minerals obtainable by prescribed mining operations.

mining authority
means any permit, licence, lease or other authority that:

(a) is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b) authorises the carrying on of mining operations for the extraction (other than merely by taking samples) of minerals other than petroleum from their natural site, whether or not it also authorises other things.

mining cash bidding payment
means an amount paid for the grant of a mining authority, where:

(a) the mining authority was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(b) the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the mining authority; and

(c) the amount is incurred in carrying on prescribed mining operations or for the purpose of exploring or prospecting for minerals obtainable by prescribed mining operations.

retention authority
means any permit, licence, lease or other authority in relation to an area (other than a mining authority) that:

(a) is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b) is only permitted to be granted to a person who is the holder of, or of an interest in, an exploration or prospecting authority, or a retention authority, in relation to the area.