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You can claim a deduction for capital expenditure you incur on a landcare operation for land in Australia in the year it is incurred.
The deduction is available where you use the land wholly for either:
- a primary production business, or
- a business for the purpose of producing assessable income from the use of rural land-except a business of mining or quarrying.
The deduction is reduced to the extent you do not use the land wholly for either of these purposes.
You may claim the deduction even if you are only a lessee of the land.
- A landcare operation is one of the following operations:
- eradicating or exterminating animal pests from the land
- eradicating, exterminating or destroying plant growth detrimental to the land
- preventing or combating land degradation other than by the use of fences
- erecting fences to keep out animals from areas affected by land degradation to prevent or limit further damage and assist in reclaiming the areas
- erecting fences to separate different land classes in accordance with an approved land management plan
- constructing a levee or similar improvement
- constructing drainage works-other than the draining of swamps or low-lying areas-to control salinity or assist in drainage control.
No deduction is available if the capital expenditure is on plant unless it is on certain fences, dams or other structural improvements. The decline in value of plant not deductible under the landcare provisions is calculated using the general rules for working out decline in value.
In each case, apart from the construction of a levee, the operation must be carried out primarily and principally for the purpose stated. This is to ensure that the deduction for expenditure on landcare operations and the three-year write-off for water facilities cannot both be claimed for the same item of expenditure. Where a levee is constructed primarily and principally for water conservation, it is a water facility.
Any recoupment of the expenditure is assessable income.
These deductions are not available to a partnership. Expenses for landcare operations incurred by a partnership are allocated to each partner who can then claim the relevant deduction in respect of their share of the expenditure.
Last modified: 09 Feb 2006QC 27451