ATO Interpretative Decision
ATO ID 2004/583
Income Tax
Capital Allowances: project pools - project amount - informationFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Was the taxpayer's expenditure an amount incurred to obtain information associated with the project they proposed to carry on within subparagraph 40-840(2)(d)(v) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The taxpayer's expenditure was an amount incurred to obtain information associated with their project within subparagraph 40-840(2)(d)(v) of the ITAA 1997.
Facts
The taxpayer had identified with some certainty a project that they proposed to carry on for a taxable purpose for a determinate period. The taxpayer was required to lodge a development permit application with supporting material to the local government authority for approval to proceed with the project.
The taxpayer incurred capital expenditure in engaging a town planner for the preparation and submission of the application. The taxpayer also paid for a report on access and services (for example, how and where to access utilities and services such as power and telecommunication) for their project.
Reasons for Decision
Broadly, section 40-830 of the ITAA 1997 allows a deduction over the project life of a project for project amounts allocated to a project pool.
To be a 'project amount' within subsection 40-840(2) of the ITAA 1997, an amount must be capital expenditure which, in addition to satisfying paragraphs 40-840(2)(a) to 40-840(2)(c) of the ITAA 1997, is one of the amounts specified in subparagraphs 40-840(2)(d)(i) to 40-840(2)(d)(vii) of the ITAA 1997. The amount specified in subparagraph 40-840(2)(d)(v) of the ITAA 1997 is an amount incurred to obtain information associated with the project.
Information is associated with the project if the information obtained is about the substance of the project. In the case of a project which the taxpayer proposes to carry on, there would have to be some certainty of the subject of the project before it could be shown that the information being obtained was associated with the project.
The information about access and services and the information produced by the town planner was information about the substance of a project sufficiently identified to make application for a development permit with the local government authority.
Accordingly, the taxpayer's expenditure was an amount incurred to obtain information associated with their project within subparagraph 40-840(d)(2)(v) of the ITAA 1997.
Date of decision: 1 June 2004Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 40-830
subsection 40-840(2)
paragraph 40-840(2)(d)
subparagraph 40-840(2)(d)(v)
ATO ID 2003/207
ATO ID 2004/253
ATO ID 2004/580
ATO ID 2004/581
ATO ID 2004/582
Keywords
Capital Allowances CoE
Project amount
Project pool
Uniform capital allowances system
ISSN: 1445-2782
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