Taxation Ruling

TR 98/23W

Income tax: mining exploration and prospecting expenditure

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Notice of Withdrawal

Taxation Ruling TR 98/23 is withdrawn with effect from today.

1. This Ruling set out the ATO view on the availability of deductions for exploration or prospecting expenditure, under former Division 330 of Income Tax Assessment Act 1997 (ITAA 1997).

2. It is replaced by Draft Taxation Ruling TR 2015/D4 Income tax: deductions for mining and petroleum exploration expenditure which was issued today.

3. This Ruling is being withdrawn because it is written in terms of Division 330 of the ITAA 1997 which was repealed in July 2001 and replaced with the Uniform Capital Allowance regime (UCA) in Division 40 of the ITAA 1997. While there are many similarities between the two regimes in relation to deductions for exploration or prospecting expenditure, there are also a number of important differences. For example, the UCA regime provides an immediate deduction for the cost of depreciating assets 'first used' for exploration or prospecting where certain conditions are met, which was not previously available under former Division 330.

4. Three other reasons for replacing this Ruling include:

To clarify that the final investment decision (FID) point does not provide a 'bright line' for determining whether expenditure qualifies as exploration or prospecting or not.
To ensure the Commissioner's view on deductions for mining and petroleum exploration expenditure addresses current industry practices and concerns, several of which have changed or emerged since 1998.
To provide clearer guidance and reduce disputes on the application of the income tax law, so as to minimise compliance and administration costs.

5. It is proposed that when the draft Ruling is finalised, it will apply both before and after its date of issue. While it is anticipated that the final Ruling will not provide a less favourable outcome to taxpayers than TR 98/23 that it replaces, a process has been put in place to address situations where taxpayers have applied TR 98/23 in full to arrangements before its withdrawal and believe the outcome is more favourable than would otherwise be the case applying the views in the final Ruling.

Commissioner of Taxation
28 October 2015


You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Previously released to the public in draft form as TR 98/D11


ATO references:
NO 1-7E40RR0

ISSN: 2205-6122

Subject References:
exploration or prospecting
foreign branch income
mining, quarrying or prospecting
mining companies
mining operations

Legislative References:
ITAA36 51(1)
ITAA36 79D
ITAA36 122B
ITAA36 122J
ITAA36 122J(1)
ITAA36 122J(4D)(b)(i)
ITAA36 122J(6)
ITAA97 8-1
ITAA97 330-15
ITAA97 330-15(1)
ITAA97 330-15(2)
ITAA97 330-20
ITAA97 330-80
ITAA97 330-85
ITAA97 330-245(2)(b)
ITAA97 330-245(2)(b)(i)
ITAA97 330-270(1)
ITAA97 330-310
ITAA97 330-310(2)
ITAA97 330-A
ITAA97 330-C
ITAA97 330-D
ITAA97 330-E
ITAA97 330-F
ITAA97 330-H

Case References:
FC of T v. Ampol Exploration Limited
86 ATC 4859
(1986) 18 ATR 102

Robe River Mining Co Pty Ltd v. FC of T
89 ATC 4606
(1989) 20 ATR 768

Utah Development Co. v. FC of T
75 ATC 4103
(1975) 5 ATR 334

Other References:
Explanatory Memorandum: Taxation Laws Amendment Act (No 3) 1991

TR 98/23W history
  Date: Version: Change:
  16 December 1998 Original ruling  
You are here 28 October 2015 Withdrawn