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-H - Capital expenditure that is immediately deductible  

Operative provisions

SECTION 40-730   Deduction for expenditure on exploration or prospecting  

40-730(1)  


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.

Note:

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.

    40-730(2A)  
    (Repealed by No 96 of 2014)

    40-730(2B)  
    (Repealed by No 96 of 2014)

    40-730(3)  


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

    40-730(4)  
    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)

    40-730(5)  
    Minerals includes * petroleum.

    40-730(6)  
    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.

    40-730(7)  


    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.

    40-730(7A)  
    (Repealed by No 96 of 2014)

    40-730(7B)  
    (Repealed by No 96 of 2014)

    40-730(8)  
    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.

    40-730(9)  
    (Repealed by No 96 of 2014)


     

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