Income Tax Assessment Act 1997



Division 40 - Capital allowances  

Subdivision 40-H - Capital expenditure that is immediately deductible  

Operative provisions

SECTION 40-730   Deduction for expenditure on exploration or prospecting  


You can deduct expenditure you incur in an income year on * exploration or prospecting for * minerals, or quarry materials, obtainable by * mining and quarrying operations if, for that expenditure, you satisfy one or more of these paragraphs:

(a) you carried on mining and quarrying operations;

(b) it would be reasonable to conclude you proposed to carry on such operations;

(c) you carried on a * business of, or a business that included, exploration or prospecting for minerals or quarry materials obtainable by such operations, and the expenditure was necessarily incurred in carrying on that business.


If Division 250 applies to you and an asset that is land:

  • (a) if section 250-150 applies - you cannot deduct expenditure you incur in relation to the land to the extent specified under subsection 250-150(3) ; or
  • (b) otherwise - you cannot deduct such expenditure.
  • 40-730(2)  
    However, you cannot deduct expenditure under subsection (1) if it is expenditure on:

    (a) development drilling for * petroleum; or

    (b) operations in the course of working a mining property, quarrying property or petroleum field.

    (Repealed by No 96 of 2014)

    (Repealed by No 96 of 2014)


    Also, you cannot deduct expenditure under subsection (1) to the extent that it forms part of the *cost of a *depreciating asset. Definitions

    Exploration or prospecting includes:

    (a) for mining in general, and quarrying:

    (i) geological mapping, geophysical surveys, systematic search for areas containing * minerals (except * petroleum) or quarry materials, and search by drilling or other means for such minerals or materials within those areas; and

    (ii) search for ore within, or near, an ore-body or search for quarry materials by drives, shafts, cross-cuts, winzes, rises and drilling; and

    (b) for petroleum mining:

    (i) geological, geophysical and geochemical surveys; and

    (ii) exploration drilling and appraisal drilling; and

    (c) feasibility studies to evaluate the economic feasibility of mining minerals or quarry materials once they have been discovered; and

    (d) obtaining * mining, quarrying or prospecting information associated with the search for, and evaluation of, areas containing minerals or quarry materials.

    (e) (Repealed by No 96 of 2014)

    Minerals includes * petroleum.

    Petroleum means:

    (a) any naturally occurring hydrocarbon or naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or

    (b) any naturally occurring mixture of:

    (i) one or more hydrocarbons, whether in a gaseous, liquid or solid state; and

    (ii) one or more of the following: hydrogen sulphide, nitrogen, helium or carbon dioxide;

    whether or not that substance has been returned to a natural reservoir.


    Mining and quarrying operations means:

    (a) mining operations on a mining property for extracting * minerals (except * petroleum) from their natural site; or

    (b) mining operations for the purpose of obtaining petroleum; or

    (c) quarrying operations on a quarrying property for extracting quarry materials from their natural site;

    for the * purpose of producing assessable income.

    (Repealed by No 96 of 2014)

    (Repealed by No 96 of 2014)

    Mining, quarrying or prospecting information is geological, geophysical or technical information that:

    (a) relates to the presence, absence or extent of deposits of * minerals or quarry materials in an area; or

    (b) is likely to help in determining the presence, absence or extent of such deposits in an area.

    (Repealed by No 96 of 2014)


    Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

    CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

    The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.