CHAPTER 2
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LIABILITY RULES OF GENERAL APPLICATION
PART 2-10
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CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE
Division 40
-
Capital allowances
History
Div 40 substituted for Divs 40, 41 and 42 by No 76 of 2001.
Subdivision 40-G
-
Capital expenditure of primary producers and other landholders
History
Subdiv 40-G inserted by No 76 of 2001.
Operative provisions
SECTION 40-630
Landcare operations
40-630(1)
You can deduct capital expenditure you incur at a time in an income year on a
*
landcare operation for:
(a)
land in Australia you use at the time for carrying on a
*
primary production business; or
(b)
rural land in Australia you use at the time for carrying on a
*
business for a
*
taxable purpose from the use of that land (except a business of
*
mining and quarrying operations).
Note:
If Division
250
applies to you and an asset that is land:
(a) if section
250-150
applies
-
you are taken not to be using the land for the purpose of carrying on a primary production business, or a business for the purpose of producing assessable income from the use of rural land (except a business of mining and quarrying operations), to the extent specified under subsection
250-150(3)
; or
(b) otherwise
-
you are taken not to be using the land for such a purpose.
History
S 40-630(1) amended by No 15 of 2017, s 3 and Sch 4 item 42, by substituting para (a) of the note, effective 1 April 2017. Para (a) of the note formerly read:
(a) if section 250-150 applies
-
you are taken to be using the land for the purpose of carrying on a primary production business, or a business for the purpose of producing assessable income from the use of rural land (except a business of mining and quarrying operations), to the extent specified in a determination made under subsection 250-150(3); or
S 40-630(1) amended by No 96 of 2014, s 3 and Sch 5 items 10 and 11, by omitting
"
or *geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b) and
"
or geothermal energy extraction
"
after
"
and quarrying operations
"
from para (a) in the note, effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1) amended by No 84 of 2013, s 3 and Sch 3 items 10
-
11, by inserting
"
or
*
geothermal energy extraction
"
in para (b) and
"
or geothermal energy extraction
"
in the note, applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1) amended by No 14 of 2012, s 3 and Sch 3 items 19 and 20, by inserting
"
and quarrying
"
in para (b) and para (a) to the note at the end, effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1) amended by
No 164 of 2007
, s 3 and Sch 1 item 48, by inserting the note at the end, effective 25 September 2007.
40-630(1A)
A
*
rural land irrigation water provider can deduct capital expenditure it incurs at a time in an income year on a
*
landcare operation for:
(a)
land in Australia that other entities use at the time for carrying on
*
primary production businesses; or
(b)
rural land in Australia that other entities use at the time for carrying on
*
businesses for a
*
taxable purpose from the use of that land (except a business of
*
mining and quarrying operations);
being entities supplied with water by the rural land irrigation water provider.
History
S 40-630(1A) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or *geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1A) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1A) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1A) inserted by No 23 of 2005.
40-630(1B)
A
rural land irrigation water provider
is:
(a)
an
*
irrigation water provider; or
(b)
an entity whose
*
business is primarily and principally the supply (otherwise than by using a
*
motor vehicle) of water to entities for use in carrying on
*
businesses (except businesses of
*
mining and quarrying operations) using rural land in Australia.
History
S 40-630(1B) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or *geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(1B) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(1B) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
S 40-630(1B) inserted by No 23 of 2005.
Exception: plant
40-630(2)
However, you cannot deduct an amount under this Subdivision for capital expenditure on
*
plant, except:
(a)
a fence erected for a purpose described in paragraph
40-635(1)(a)
or (b); or
(b)
a dam or structural improvement (except a fence) covered by paragraph (1)(c), (d), (e) or (f) of the definition of
plant
in section
45-40
.
40-630(2A)
In applying paragraph (2)(b) to capital expenditure incurred by a
*
rural land irrigation water provider on a dam or structural improvement, the requirement in paragraph
45-40(1)
(c) that the land on which the dam or structural improvement is situated be used for agricultural or pastoral operations is to be disregarded.
History
S 40-630(2A) inserted by No 23 of 2005.
Exception: deduction available under Subdivision 40-F
40-630(2B)
A
*
rural land irrigation water provider cannot deduct an amount under this Subdivision for capital expenditure if the entity can deduct an amount for that expenditure under Subdivision
40-F
.
History
S 40-630(2B) inserted by No 23 of 2005.
Exception: deduction available under Subdivision 40-J
40-630(2C)
You cannot deduct an amount under this Subdivision for capital expenditure if any entity can deduct an amount for that expenditure for any income year under Subdivision
40-J
.
History
S 40-630(2C) inserted by
No 38 of 2008
, s 3 and Sch 8 item 5, applicable to the 2007-08 income year and later income years.
Reduction of deduction
40-630(3)
You must reduce your deduction by a reasonable amount to reflect your use of the land in the income year after the time when you incurred the expenditure for a purpose other than the purpose of carrying on:
(a)
a
*
primary production business; or
(b)
a
*
business for the
*
purpose of producing assessable income from the use of rural land (except a business of
*
mining and quarrying operations).
History
S 40-630(3) amended by No 96 of 2014, s 3 and Sch 5 item 12, by omitting
"
or *geothermal energy extraction
"
after
"
and quarrying operations
"
from para (b), effective 30 September 2014 and applicable to expenditure incurred during the income year in which this Schedule commences or a later income year.
S 40-630(3) amended by No 84 of 2013, s 3 and Sch 3 item 12, by inserting
"
or
*
geothermal energy extraction
"
in para (b), applicable to expenditure incurred on or after 1 July 2012.
S 40-630(3) amended by No 14 of 2012, s 3 and Sch 3 item 21, by inserting
"
and quarrying
"
in para (b), effective 1 July 2012. For application and transitional provisions see note under s
15-85
.
40-630(4)
Subsection (3) does not apply to expenditure incurred by a
*
rural land irrigation water provider. Instead, a rural land irrigation water provider must reduce its deduction in relation to particular land by a reasonable amount to reflect an entity
'
s use of the land in the income year after the rural land irrigation water provider incurred the expenditure for a purpose other than a
*
taxable purpose.
History
S 40-630(4) inserted by No 23 of 2005.
S 40-630 inserted by No 76 of 2001.