INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10F - Deduction for capital expenditure incurred in establishing horticultural plants  

Subdivision F - Special deduction for destruction of plants  

SECTION 124ZZM   SPECIAL DEDUCTION FOR DESTRUCTION OF PLANTS  

124ZZM(1)   [Application of section]  

This section applies if:

(a) there is an amount of establishment expenditure for a horticultural plant; and

(b) during a year of income, the plant is destroyed; and

(c) immediately before the destruction, a taxpayer owned the plant and used it in a business of horticulture for the purpose of producing assessable income; and

(d) the number of years in the effective life of the plant is 3 or more.

Note:

Effective life is defined by section 124ZZK .

124ZZM(2)   Deduction if taxpayer receives an amount in respect of the destruction.  

If:

(a) an amount (the recoverable amount ) was or is received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction; and

(b) the amount worked out using the formula set out in subsection (4) exceeds the recoverable amount;

the excess is allowable as a deduction to the taxpayer for the year of income.

124ZZM(3)   Deduction if taxpayer does not receive an amount in respect of the destruction.  

If no amount was or is received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction, the amount worked out using the formula set out in subsection (4) is allowable as a deduction to the taxpayer for the year of income.

124ZZM(4)   Formula.  

The formula mentioned in subsections (2) and (3) is:

Establishment expenditure   −   Notional deduction

where:

Establishment expenditure means the amount of the establishment expenditure for the plant.

Notional deductions means the deduction, or the total of the deductions, that would have been allowable to the taxpayer under section 124ZZG for the establishment expenditure if it were assumed that, at all times during the period:

(a) beginning when the plant first became capable of being used:

(i) for the purpose of producing assessable income; and

(ii) in a business of horticulture; and

(b) ending when the plant was destroyed;

the taxpayer had owned the plant and had used it:

(c) for the purpose of producing assessable income; and

(d) in a business of horticulture.