Before the end of the 2000–01 income year, if you could deduct amounts for capital expenditure on landcare operations see Landcare operations or water facilities see Water facilities you could choose a tax offset of 30%, instead of a deduction, for up to $5,000 of your expenditure on each of these things.
The tax offset is not available for expenditure incurred after the end of the 2000–01 income year.
As the tax offset for expenditure on landcare operations was able to be claimed in the year you incurred the expenditure, the offset is not available for the 2002–03 income year.
The tax offset for expenditure on water facilities is based on one-third of the expenditure in the year it was incurred and in each of the next two years. This means that if you chose the tax offset for expenditure you incurred in the 2000–01 income year, the tax offset is still able to be claimed for the 2002–03 income year. To choose the tax offset, your taxable income for the 2000–01 income year must have been $20,000 or less after notionally deducting the amount that you would have claimed for water facilities had you not chosen the tax offset.
Note: Any landcare and water facility tax offset that you cannot use in this income year can be carried forward to a later income year and may reduce the income tax that you would otherwise have to pay in that later income year. Before you apply the tax offset in a later income year, you must apply it to reduce certain amounts of net exempt income.
The UCA maintains the treatment of some capital expenditure and also introduces new deductions for some capital expenditure that did not previously attract a deduction. Most of these deductions are only available if the expenditure does not form part of the cost of a depreciating asset.
The following types of capital expenditure are deductible under the UCA:
- landcare operations, electricity connections or telephone lines incurred by primary producers and other landholders see Capital expenditure of primary producers and other landholders
- environmental protection activities see Environmental protection activities
- exploration and prospecting see Mining and quarrying and minerals transport
- rehabilitation of mining and quarrying sites see Mining and quarrying and minerals transport
- petroleum resource rent tax see Mining and quarrying and minerals transport
- certain capital expenditure directly connected with a project see Project pools
- certain business related costs see Business related costs-section 40-880 deductions.
Generally, to work out your deductions you need to reduce the expenditure by the amount of any GST input tax credits you are entitled to claim in relation to the expenditure. Increasing or decreasing adjustments that relate to the expenditure may be allowed as a deduction or included in assessable income, respectively. Special rules apply to input tax credits on expenditure allocated to a project pool see Project pools.
STS taxpayers (except primary producers) may deduct capital expenditure under these UCA rules only if the expenditure is not part of the cost of a depreciating asset. Primary producers who are STS taxpayers can choose to deduct certain depreciating assets under the UCA rules see STS taxpayers.