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Environmental protection activities

Last updated 7 April 2020

You can claim an immediate deduction for expenditure that you incur for the sole or dominant purpose of carrying on environmental protection activities (EPA). EPA are activities undertaken to prevent, fight or remedy pollution, or to treat, clean up, remove or store waste, from your earning activity or a site on which another entity carried on a business that you acquired and carry on substantially unchanged as your earning activity. Your earning activity is one you carried on, carry on or propose to carry on for one or more of these purposes:

  • producing assessable income (other than a net capital gain)
  • exploration or prospecting
  • mining site rehabilitation.

You may also claim a deduction for expenditure on EPA relating to a site if the pollution or waste is caused by another entity to which you have leased or granted a right to use the site.

The deduction is not available for:

  • EPA bonds and security deposits
  • expenditure on acquiring land
  • expenditure on constructing or altering buildings, structures or structural improvements
  • expenditure to the extent that you can deduct an amount for it under another provision.

Expenditure on EPA that is also for an environmental impact assessment of your project is not deductible as expenditure on EPA. However, if it is capital expenditure directly connected with a project, it could be a project amount for which a deduction would be available over the project life - see Project pools.

Also, expenditure which forms part of the cost of a depreciating asset is not deductible as expenditure on EPA if a deduction is available for the decline in value of the asset.

A recoupment of the expenditure may be included in your assessable income.

Note that expenditure incurred on or after 19 August 1992 on certain earthworks constructed as a result of carrying out EPA can be written off at a rate of 2.5% under the provisions for capital works expenditure.