INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10AA - Prospecting and mining for petroleum  

SECTION 124AM   DISPOSAL, LOSS, DESTRUCTION OR TERMINATION OF USE OF PROPERTY  

124AM(1)   [Application]  

This section applies where deductions have been allowed or are allowable under this Division in respect of expenditure of a capital nature by the taxpayer in respect of property of the taxpayer that, in the year of income has been disposed of, lost or destroyed, or the use of which by the taxpayer for purposes of carrying on prescribed petroleum operations or of exploring or prospecting for petroleum has, in the year of income, been otherwise terminated.

124AM(1A)   [Relevant event to occur before end 1996/97 year]  

The disposal, loss or destruction of the property, or the termination of use of the property by the taxpayer for purposes of carrying on prescribed petroleum operations or of exploration or prospecting for petroleum, must have occurred in the 1996-97 year of income or an earlier year of income.

Note:

Subdivision 330-J of the Income Tax Assessment Act 1997 deals with balancing adjustments for the 1997-98 year of income and later years of income.

124AM(2)   [Assessable income]  

Where the aggregate of:

(a) the sum of the deductions so allowed, or allowable; and

(b) the consideration receivable in respect of the disposal, loss or destruction or, in the case of other termination of the use of property, the value of the property at the date of termination of use,

exceeds the total expenditure of a capital nature of the taxpayer in respect of that property, there shall be included in the assessable income of the taxpayer of the year of income so much of the amount of the excess as does not exceed the sum of those deductions, and the amount so included shall be deemed for the purposes of this Division to be assessable income from petroleum.

124AM(3)   [Allowable deduction]  

Where the total expenditure referred to in subsection (2) exceeds the aggregate referred to in that subsection, the excess is, subject to subsection (4), an allowable deduction from the assessable income of the taxpayer of the year of income.

124AM(4)   [Limit of deduction]  

The amount of the deduction, or the sum of the amounts of the deductions, allowable under subsection (3) in respect of the year of income in relation to property:

(a) that was disposed of, lost or destroyed on or before 17 August 1976; or

(b) the use of which by the taxpayer for the purposes mentioned in subsection (1) was otherwise terminated on or before that date,

shall not exceed the amount remaining after deducting from the assessable income from petroleum derived by the taxpayer in the year of income all deductions allowable otherwise than under this Division in respect of that assessable income.

124AM(5)   [Reduction subsequently deductible]  

If the amount of the deduction, or the sum of the amounts of the deductions, that would, but for subsection (4), be allowable from the assessable income of the taxpayer of the year of income under subsection (3) (including any amount or amounts that would be an allowable deduction or allowable deductions from that assessable income by any previous application or applications of this subsection) is reduced by the operation of subsection (4), the amount of the reduction shall be deemed to be an allowable deduction under subsection (3) from the assessable income of the taxpayer of the first subsequent year of income in which the taxpayer derives assessable income from petroleum.

124AM(6)   [Deductions not under this Division]  

The reference in subsection (4) to all deductions allowable otherwise than under this Division in respect of assessable income from petroleum derived by the taxpayer in the year of income is a reference to:

(a) any deductions allowable otherwise than under this Division from the assessable income of the taxpayer of the year of income that relate exclusively to that assessable income from petroleum; and

(b) so much of any other deduction allowable otherwise than under this Division from the assessable income of the taxpayer of the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income from petroleum.

124AM(7)   [Consideration receivable defined]  

In this section, consideration receivable in respect of the disposal, loss or destruction means:

(a) where the property is sold (whether with or without other property) for a specified price - the sale price of the property, less the expenses of the sale of the property, or such part of the expenses of the sale of the property together with the other property as the Commissioner determines;

(b) where the property is sold with other property and a specified price is not allocated to the property - such part of the total sale price, less the expenses of the sale, as the Commissioner determines;

(c) where the property is disposed of otherwise than by sale - the value, if any, of the property at the date of disposal; or

(d) where the property is lost or destroyed - the amount or value received or receivable under a policy of insurance or otherwise in respect of the loss or destruction,

but does not include an amount that is included, or will, when received, be included, in the assessable income of any year of income under section 26AB or Division 4 .

124AM(8)   [Use of property for petroleum operations]  

For the purposes of subsection (1), use of property by a taxpayer is taken to be use for purposes of carrying on prescribed petroleum operations or of exploring or prospecting for petroleum if:

(a) the use is on or after 1 July 1991; and

(b) the use is for rehabilitation-related activities in relation to a site on which the taxpayer conducted:

(i) prescribed petroleum operations within the meaning of subsection 124(1) ; or

(ii) activities in respect of which a deduction is allowable, or has been allowed, under section 124AH ; and

(c) either of the following conditions is satisfied:

(i) the property is plant or articles for the purposes of section 54 ;

(ii) expenditure on the property is covered by paragraph 124AA(2)(c) , (d) or (e).

124AM(9)   [Property held in reserve for particular purpose]  

A reference in subsection (8) to use of property by a taxpayer for a particular purpose includes a reference to the holding in reserve of property owned by the taxpayer which has been installed ready for use for that purpose.

124AM(10)   [Definition]  

In this section:

rehabilitation-related activities
has the same meaning as in Division 10AB .