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Ruling
Subject: 40-730 deduction
Question 1
Whether the expenditure is deductible under section 8-1of the ITAA 1997?
Answer
No
Question 2
Whether the expenditure will be deductible under Subdivision 40-H of the ITAA 1997?
Answer
No
Question 3
Whether the expenditure will be deductible under Subdivision 40-I of the ITAA 1997?
Answer
Yes
The scheme commences on:
Relevant facts and circumstances
ACo is a mining company that has incurred expenditure in respect of feasibility studies in relation to a transportation joint venture project.
Relevant legislative provisions
Subdivision 40-I of the ITAA 1997
Reasons for decision
Question 1
Whether the expenditure is deductible under section 8-1of the ITAA 1997?
Detailed reasoning
ACo's expenditure is capital in nature as it secures a long term advantage and therefore it will not be deductible under section 8-1 of the ITAA 1997.
Question 2
Whether the expenditure will be deductible under Subdivision 40-H of the ITAA 1997?
Detailed reasoning
ACo's costs in respect of the feasibility studies will not be deductible pursuant to section 40-730 of the ITAA 1997 as it does not constitute exploration or prospecting as defined.
Question 3
Whether the expenditure will be deductible under Subdivision 40-I of the ITAA 1997?
Detailed reasoning
ACo's expenditure meets the requirements of Subdivision 40-I of the ITAA 1997 as it constitutes a project amount, and it will be deductible under this subdivision.