INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10AA - Prospecting and mining for petroleum  

SECTION 124AB   PURCHASE OF PROSPECTING OR MINING RIGHTS OR INFORMATION  

124AB(1)   [Allowable capital expenditure]  

Where a person (in this section referred to as the purchaser ):

(a) has incurred or incurs expenditure 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) incurs expenditure on or after 1 July 1976,

in acquiring from another person (in this section referred to as the vendor ) a petroleum prospecting or mining right or petroleum prospecting or mining 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 proportion of the expenditure incurred by the purchaser in acquiring the right or information that has not been the subject of an agreement made under subsection 124ABA(2) .

124AB(2)   [Unrecouped previous capital expenditure]  

Where a person (in this section also referred to as the purchaser ):

(a) has incurred expenditure on or before 17 September 1974; or

(b) has incurred or incurs expenditure after 17 September 1974 and before 1 July 1976 in pursuance of a contract made on or before 17 September 1974,

in acquiring from another person (in this section also referred to as the vendor ) a petroleum prospecting or mining right or petroleum prospecting or mining information, the purchaser and the vendor may give notice to the Commissioner that they have agreed to the inclusion in the unrecouped previous capital expenditure of the purchaser of an amount specified in the notice, being the whole or a part of the expenditure so incurred.

124AB(3)   [Maximum amount that may be specified]  

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 expenditure of a capital nature (other than expenditure on plant) 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 124ADG - 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 124ADG :

(A) has not been allowed and is not allowable as a deduction to the vendor under subsection 124ADG(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 124AA(2)(b) in respect of a transaction entered into before the first-mentioned transaction;

(b) so much of the expenditure of a capital nature 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 would have been included in the unrecouped previous 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;

(c) any expenditure of the vendor (other than expenditure on plant in use by the vendor at the date of the transaction) to which section 124AH applies 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 preceding year of income; and

(d) the amount included in the vendor's assessable income under section 124AM 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 Division, be deemed to be the amount in fact so specified less the amount of the excess.

124AB(4)   [Expenditure on buildings, etc]  

For the purposes of paragraphs (3)(a) and (b), the expenditure of a capital nature incurred by the vendor in relation to an area the subject of a petroleum prospecting or mining right shall be deemed not to include expenditure of a capital nature on buildings or other improvements unless rights in respect of them are acquired by the purchaser with the petroleum prospecting or mining right.

124AB(5)   [Form and time of agreement]  

An agreement under this section must be:

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

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

124AB(6)