INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10 - Mining and quarrying  

Subdivision A - General mining  

SECTION 122B   PURCHASE OF MINING OR PROSPECTING RIGHT OR INFORMATION  

122B(1)   [Allowable capital expenditure of purchaser]  

Where a person (in this section referred to as the purchaser ) has incurred expenditure in acquiring from another person (in this section referred to as the vendor ) for the purpose of carrying on prescribed mining operations, or exploration or prospecting for minerals obtainable by prescribed mining operations, a mining or prospecting right or mining or prospecting information, the purchaser and the vendor may agree to include in the allowable capital expenditure of the purchaser a specified amount representing all or part of the expenditure incurred in the acquisition that has not been the subject of an agreement made under subsection 122BA(5) .

122B(2)   [Maximum amount]  

If the amount specified in an agreement made under this section in respect of a transaction exceeds the sum of:

(a) so much of the capital expenditure (other than expenditure on plant or expenditure of a kind referred to in section 122J or in section 123AA of the Income Tax Assessment Act 1936-1967 ) incurred by the vendor before the date of the transaction in relation to the area that is the subject of the right or to which the information relates as:

(i) to the extent to which that expenditure is not allowable (post 19 July 1982) capital expenditure within the meaning of section 122DG - would have been included in the residual previous capital expenditure, the residual capital expenditure, the residual (1 May 1981 to 18 August 1981) capital expenditure or the residual (19 August 1981 to 19 July 1982) capital expenditure of the vendor as at the end of the year of income of the vendor during which the transaction occurred but for the transaction and any later transaction in relation to that area; and

(ii) to the extent to which that expenditure is allowable (post 19 July 1982) capital expenditure within the meaning of section 122DG :

(A) has not been allowed and is not allowable as a deduction to the vendor under subsection 122DG(2) in respect of a year of income of the vendor preceding the year of income during which the transaction occurred; and

(B) is attributable to an amount of expenditure incurred in relation to that area that has not been taken into account in determining an amount to be included in the allowable capital expenditure of a person under paragraph 122A(1)(d) in respect of a transaction entered into before the first-mentioned transaction;

(b) any expenditure of the vendor (other than expenditure on plant in use by the vendor at the date of the transaction) of a kind referred to in section 122J or in section 123AA of the Income Tax Assessment Act 1936-1967 incurred by the vendor before the date of the transaction that has not been allowed and is not allowable as a deduction to the vendor in the year of income in which the transaction takes place or in any prior year of income; and

(c) (Omitted by No 107 of 1989)

(d) the amount included in the vendor's assessable income under section 122K in relation to property acquired by the purchaser from the vendor in connexion with the transaction;

the amount specified in the agreement shall, for all purposes of this Subdivision, be deemed to be the amount in fact so specified less the amount of the excess.

122B(3)   [Buildings and improvements - subsec (2)(a)]  

For the purposes of paragraph (2)(a), the capital expenditure incurred by the vendor in relation to an area the subject of a mining or prospecting right shall be deemed not to include capital expenditure on buildings or other improvements unless rights in respect of them are acquired by the purchaser with the mining or prospecting right.

122B(4)   [Effect of agreement]  

If:

(a) expenditure referred to in subsection (1) relates to a lease; and

(b) the grant, assignment or surrender of that lease is the subject of an election under subsection 88B(5) (whether made before or after an agreement under subsection (1) is made);

any agreement made under subsection (1) in respect of that expenditure is of no effect for the purposes of this section.

122B(5)   [Form and time of agreement]  

An agreement made under subsection (1) must:

(a) be in writing and signed by or on behalf of each party to the agreement; and

(b) be made not later than 2 months after the end of the year of income of the purchaser in which the right or information was acquired, or within such further time as the Commissioner allows.

122B(6)