INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10AA - Prospecting and mining for petroleum  

SECTION 124AA   ALLOWABLE CAPITAL EXPENDITURE  

124AA(1)   [Applicable dates]  

This section applies to expenditure that:

(a) was or is incurred after 17 September 1974 and before 1 July 1976 otherwise than in pursuance of a contract made on or before 17 September 1974; or

(b) is incurred on or after 1 July 1976 and before the 1997-98 year of income.

Note:

Subdivision 330-C of the Income Tax Assessment Act 1997 gives a taxpayer a deduction for allowable capital expenditure incurred in the 1997-98 year of income or a later year of income.

124AA(2)   [Allowable expenditure]  

For the purposes of this Division, allowable capital expenditure of a taxpayer is expenditure of a capital nature to which this section applies incurred by the taxpayer in carrying on prescribed petroleum operations and on buildings, other improvements or plant necessary for carrying on such operations, and includes:

(a) expenditure of a capital nature to which this section applies incurred by the taxpayer 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 petroleum operations carried on by the taxpayer;

(aa) expenditure of a capital nature to which this section applies incurred by the taxpayer on or after 25 August 1977 on plant for use solely in liquefying natural gas obtained from the carrying on by the taxpayer of prescribed petroleum operations;

(b) so much of any expenditure to which this section applies that the taxpayer has incurred in acquiring from another person a petroleum prospecting or mining right or petroleum prospecting or mining information as is specified in a notice under subsection 124AB(1) duly given to the Commissioner by the taxpayer and that other person;

(ba) expenditure of a capital nature that the taxpayer is taken to have incurred by section 124ABA ;

(c) expenditure of a capital nature to which this section applies incurred by the taxpayer in providing residential accommodation for the use of employees of the taxpayer engaged in, or in connexion with, prescribed petroleum operations, or for the use of dependants of those employees, being accommodation situated on or adjacent to the site of the operations;

(d) expenditure of a capital nature to which this section applies incurred by the taxpayer in providing health, educational, recreational or other similar facilities, or facilities for the supply of meals, on or adjacent to the site of prescribed petroleum operations, being facilities that:

(i) are provided principally for the welfare of employees referred to in paragraph (c) or of dependants of those employees; and

(ii) are not conducted for the purpose of profit-making by the taxpayer or any other person; and

(e) expenditure of a capital nature to which this section applies incurred by the taxpayer in relation to works carried out directly in connexion with accommodation and facilities referred to in paragraphs (c) and (d), including works for the provision of water, light, power, access or communications,

but does not include expenditure incurred in relation to:

(f) pipe-lines constructed for the transport of petroleum obtained from prescribed petroleum operations (other than transport forming part of those operations), or plant (including pumping apparatus, storage tanks, port facilities and other terminal facilities) for use primarily and principally, and directly, in connexion with the operation of such a pipe-line;

(g) ships, railway rolling-stock and road vehicles for use for the transport of petroleum obtained from prescribed petroleum operations other than road vehicles for use in those operations; and

(h) plant for use in the refining of petroleum or of the products of petroleum.

124AA(2A)   [Limitation for qualifying as allowable capital expenditure]  

Expenditure on property (being plant or articles for the purposes of section 54 ) is not allowable capital expenditure for the purposes of this Division 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.

124AA(2B)   [Amendment of assessments]  

Notwithstanding section 170 , the Commissioner may at any time amend an assessment for the purpose of giving effect to subsection (2A) of this section.

124AA(3)   [``natural gas'']  

In this section, natural gas means a mixture of hydrocarbons, or of hydrocarbons and other gases, that:

(a) consists principally of methane; and

(b) is in a gaseous state at a temperature of 15 degrees Celsius and a pressure of one atmosphere.