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 transferees

SECTION 40-1130   Consequences of certain exploration benefits provided under farm-in farm-out arrangements  

40-1130(1)  
If, under a *farm-in farm-out arrangement, you provide an *exploration benefit in relation to the transfer to you of part of another entity ' s interest in a *mining, quarrying or prospecting right:


(a) the first element of the *cost of the part of the interest is reduced by the *market value of the exploration benefit; and


(b) if, for providing the exploration benefit, you receive a reward as a result of which an amount would, apart from this paragraph, be included in your assessable income - the entire amount of the reward is not assessable income and is not *exempt income; and


(c) subsection 40-730(3) does not apply in relation to expenditure that you incur under the arrangement if the reduction in market value under paragraph (a) took into account your liability to incur that expenditure.

40-1130(2)  
A reduction under paragraph(1)(a) may be a reduction to nil.


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