Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-K - Farm-in farm-out arrangements  

Consequences for transferors

SECTION 40-1110  

40-1110   Cost of split interests resulting from farm-in farm-out arrangements  

Despite section 40-205 , if:

(a) under a *farm-in farm-out arrangement, you provide a part of your interest in a *mining, quarrying or prospecting right; and

(b) because of subsection 40-115(2) , this Division applies as if you had split your interest into the part you stopped *holding and the rest of your interest;

then:

(c) the first element of the *cost of the asset that consists of the part you stopped holding is a reasonable proportion of the amount you are taken to have paid under section 40-185 for any economic benefit involved in splitting your interest; and

(d) the first element of the cost of the asset that consists of the rest of your interest is the sum of:

(i) the *adjustable value of your interest just before it was split; and

(ii) a reasonable proportion of the amount you are taken to have paid under section 40-185 for any economic benefit involved in splitting your interest.