DEVELOPMENT ALLOWANCE AUTHORITY ACT 1980 (ARCHIVE)

CHAPTER 2 - DEVELOPMENT ALLOWANCE  

PART 2 - KEY CONCEPTS RELATING TO PROJECTS  

Division 5 - $50 million threshold test  

SECTION 19 (ARCHIVE)   GROSS CAPITAL EXPENDITURE  

19(1)   Gross capital expenditure.  

Subject to this section, for the purposes of this Chapter, the gross capital expenditure incurred by an entity in respect of carrying out a project is the sum of:

(a) in any case - the total expenditure of a capital nature incurred by the entity in respect of carrying out the project; and

(b) if:

(i) the entity has incurred other expenditure of a capital nature which is related directly or indirectly to the carrying out of the project; and

(ii) the DAA is satisfied that, because of special circumstances, it would be unreasonable not to treat the whole or a part of that other expenditure as gross capital expenditure incurred by the entity in respect of carrying out the project;

the whole, or the part, as the case may be, of that other expenditure.

19(1A)   Leased plant - lessor's capital expenditure attributed to lessee.  

If:

(a) an entity incurs plant expenditure in carrying out a project; and

(b) the expenditure is incurred in respect of the lease of a new unit of plant under a long-term lease agreement where the lessor is a leasing company;

the expenditure of a capital nature incurred by the lessor in respect of the acquisition or construction by the lessor of the unit of plant is taken, for the purposes of subsection (1), to be expenditure of a capital nature incurred by the entity in respect of carrying out the project.

19(1B)   Other leased property - lessor's capital expenditure attributed to lessee.  

If:

(a) an entity incurs expenditure as a lessee in respect of the lease of property (other than plant) under a long-term lease agreement where the lessor is a leasing company; and

(b) assuming that the expenditure had been incurred by the entity in respect of the acquisition of the property instead of in respect of the lease of the property, the expenditure would have been expenditure of a capital nature incurred by the entity in respect of carrying out a project;

the expenditure of a capital nature incurred by the lessor in respect of the acquisition or construction by the lessor of the property is taken, for the purposes of subsection (1), to be expenditure of a capital nature incurred by the entity in respect of carrying out the project.

19(2)   Expenditure does not count if it fails the basic eligibility test.  

Subsection (1) does not apply to expenditure to the extent to which the expenditure fails the basic eligibility test. Subsections (1A) and (1B) do not apply to expenditure incurred by the lessor to the extent to which the expenditure would have failed the basic eligibility test if it had been incurred by the entity in carrying out the project.

19(3)   Recouped expenditure does not count.  

Subsection (1) does not apply to expenditure if the entity is recouped, or becomes entitled to be recouped, in respect of the expenditure. Subsections (1A) and (1B) do not apply to expenditure if the lessor is recouped, or becomes entitled to be recouped, in respect of the expenditure.

19(4)   Dissection of recoupment.  

If an entity receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of expenditure, the DAA may, for the purposes of subsection (3), determine the extent to which that amount constitutes a recoupment of that expenditure.

19(5)   Non-arm's length transactions.  

If the DAA is satisfied that:

(a) an entity has incurred expenditure in connection with a transaction where the parties to the transaction are not dealing with each other at arm's length in relation to the transaction; and

(b) the amount of the expenditure is greater or less than is reasonable;

the amount of the expenditure is taken, for the purposes of this section, to be the amount that would have been reasonable if the parties were dealing with each other at arm's length.