INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10 - Mining and quarrying  

Subdivision B - Quarrying  

SECTION 122JE   DEDUCTION OF ALLOWABLE CAPITAL EXPENDITURE  

122JE(1)   [Expenditure incurred 15 August 1989 to end 1996/97 year]  

If, after 15 August 1989 and before the 1997-98 year of income, a taxpayer incurs allowable capital expenditure, an amount worked out in accordance with this section is an allowable deduction in respect of that expenditure in the year of income the expenditure was incurred and in all later years of income.

Note:

Subdivision 330-C of the Income Tax Assessment Act 1997 gives a taxpayer a deduction for allowable capital expenditure incurred in the 1997-98 year of income or a later year of income.

122JE(1A)   [No operation 1997/98 year onwards]  

A deduction is not allowable under subsection (1) for the 1997-98 year of income or any later year of income.

Note:

Section 330-5 of the Income Tax (Transitional Provisions) Act 1997 converts the amount of unrecouped expenditure at the end of the 1996-97 year of income into allowable capital expenditure incurred by a taxpayer in the 1997-98 year of income.

122JE(2)   [Calculation of allowable deduction]  

Subject to subsection (5), the deduction allowable under subsection (1) in respect of a year of income (in this subsection called the current year of income ) in respect of an amount of allowable capital expenditure incurred by the taxpayer is the amount calculated using the following formula:


Unrecouped expenditure
Statutory factor

where:

``Unrecouped expenditure'' means so much of that expenditure as is unrecouped as at the end of the current year of income;

``Statutory factor'' means whichever is the lesser of the following numbers:

  • (a) a number equal to the difference between:
  • (i) 20; and
  • (ii) the number of years of income (if any) preceding the current year of income in respect of which a deduction has been allowed or is allowable, or, but for the operation of subsection (5), would have been allowed or would be allowable, under subsection (1) in respect of that amount of expenditure;
  • (b) a number equal to the number of whole years in the estimated life of the quarry or proposed quarry on the quarrying property, or, if there is more than one such quarry, of the quarry that has the longer or longest estimated life, as at the end of the current year of income.
  • 122JE(3)   [Unrecouped amount of allowable capital expenditure]  

    For the purposes of subsection (2), the amount of the allowable capital expenditure incurred by a taxpayer that is unrecouped as at the end of a year of income (in this subsection called the current year of income ) is the amount calculated by deducting from the amount of that allowable capital expenditure the sum of:


    (a) any part of that allowable capital expenditure that:


    (i) has been allowed or is allowable, or, but for the operation of subsection (5), would have been allowed or would be allowable, as a deduction under subsection (1) in respect of a year of income preceding the current year of income; or

    (ii) was incurred on property (not being property in respect of which a notice has been given to the Commissioner under section 122JD by the taxpayer and a person who acquired the property from the taxpayer):

    (A) that has been disposed of, lost or destroyed; or

    (B) the use of which by the taxpayer for eligible purposes has been otherwise terminated;
    and has not been allowed and is not allowable as a deduction under subsection (1) in respect of a year of income preceding the current year of income; and


    (b) so much of any amounts specified in notices given to the Commissioner under section 122JD in relation to the acquisition from the taxpayer, during the current year of income or a year of income preceding the current year of income, of a quarrying or prospecting right or quarrying or prospecting information as:


    (i) is attributable to that allowable capital expenditure; and

    (ii) has not been allowed and is not allowable as a deduction under subsection (1) in respect of a year of income preceding the current year of income.

    122JE(4)   [Allowable deduction - subsec (3)(a)(ii) and (b)(ii)]  

    For the purposes of subparagraphs (3)(a)(ii) and (3)(b)(ii), an amount that would have been allowed or allowable as a deduction under subsection (1) but for the operation of subsection (5) is to be taken to have been allowed or to be allowable as such a deduction.

    122JE(5)   [Maximum amount of allowable deductions]  

    Subject to subsection (6):


    (a) the amount, or the total of the amounts, of the deduction or deductions allowable under subsection (1) in respect of a year of income (including any amount that is taken to be a deduction so allowable because of subsection (9)) must not exceed an amount equal to so much of the assessable income of the year of income as remains after deducting all allowable deductions (other than deductions allowable under this section, under section 122DG , under section 122J or under section 122JF ); and


    (b) where the total of the amounts of 2 or more deductions that would be allowable under this section but for this subsection exceeds the maximum amount determined in accordance with this subsection, those deductions are to be reduced respectively by amounts proportionate to those deductions and equal in total to the excess.

    122JE(6)   [Election by taxpayer]  

    A taxpayer may elect, in relation to a year of income, that subsection (7) is to apply in relation to all allowable capital expenditure in relation to the taxpayer.

    122JE(7)   [Effect of election]  

    Where:


    (a) a taxpayer makes an election under subsection (6) in relation to expenditure of a kind referred to in that subsection in relation to a year of income; and


    (b) but for this subsection, subsection (5) would apply to limit or reduce the amount of a deduction otherwise allowable under subsection (1) in relation to the year of income in relation to an amount of expenditure of that kind;

    subsection (5) does not apply to limit or reduce the amount of the deduction.

    122JE(8)   [Application of subsec (5)]  

    Where, apart from subsection (7), subsection (5) would apply to limit or reduce the amount of a deduction otherwise allowable in relation to a year of income in relation to an amount of expenditure in respect of which a taxpayer has not made an election under this section in relation to the year of income, nothing in subsection (7) affects the application of subsection (5) in relation to that year of income in relation to that amount.

    122JE(9)   [Deduction disallowed under subsec (5)]  

    Subject to subsections (10) and (11), where the whole or a part of a deduction in respect of a year of income is disallowed under subsection (5), that whole or part is taken to be a deduction that is allowable under subsection (1) in respect of the next succeeding year of income.

    Note:

    Subsection (1A) limits deductions allowable under subsection (1) to years of income before the 1997-98 year of income. Section 330-45 of the Income Tax (Transitional Provisions) Act 1997 converts the whole or a part of a deduction disallowed in the 1996-97 year of income into an amount a taxpayer can deduct in the 1997-98 year of income.

    122JE(10)   [Deduction where property disposed of, etc]  

    Where:


    (a) an amount of allowable capital expenditure was incurred by a taxpayer on property (not being property in respect of which a notice has been given to the Commissioner under section 122JD ) that, during a year of income, has been disposed of, lost or destroyed or the use of which by the taxpayer for eligible purposes has been otherwise terminated; and


    (b) the whole or a part of an amount (which whole or part is in this subsection called the attributable amount ) in respect of which a deduction would, but for this subsection, be allowable to the taxpayer in that year of income or in a succeeding year of income because of the operation of subsection (9) is attributable to the amount referred to in paragraph (a) of this subsection;

    a deduction is not allowable to the taxpayer in respect of the attributable amount.

    122JE(11)   [Deduction re notice under s 122JD]  

    Where:


    (a) an amount is specified in a notice given to the Commissioner under section 122JD in relation to the acquisition from a taxpayer, during a year of income, of a quarrying or prospecting right or quarrying or prospecting information; and


    (b) the whole or a part of an amount (which whole or part is in this subsection called the attributable amount ) in respect of which a deduction would, but for this subsection, be allowable to the taxpayer in that year of income or in a succeeding year of income because of the operation of subsection (9) is attributable to the amount referred to in paragraph (a) of this subsection;

    a deduction is not allowable to the taxpayer in respect of the attributable amount.

    122JE(12)   [Property used for purposes where allowable expenditure incurred]  

    Where:


    (a) a taxpayer has incurred allowable capital expenditure on property the use of which by the taxpayer for eligible purposes has been terminated; and


    (b) the property has come into use by the taxpayer for purposes for which allowable capital expenditure may be incurred;

    so much of the first-mentioned expenditure as the Commissioner determines is to be taken, for the purposes of this section, to have been incurred by the taxpayer on that property, on the day on which that property so came into use by the taxpayer, for the purposes for which that property so came into use.

    122JE(13)   [Estimated life of quarry]  

    Where, having regard to the information in the Commissioner's possession, the Commissioner is not satisfied that the estimated life of a quarry or a proposed quarry as made by the taxpayer is a reasonable estimate, the estimated life is to be taken, for the purposes of paragraph (2)(b), to be such period as the Commissioner considers reasonable.


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