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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    View history reference

Subdivision 40-B - Core provisions    View history reference

Operative provisions

SECTION 40-80  When you can deduct the asset's cost  

 View history reference ITAA 36

Exploration or prospecting

40-80(1)  

 [330-15(1), (2)]
The decline in value of a *depreciating asset you *hold is the asset's *cost if:


(a) you first use the asset for *exploration or prospecting for *minerals, or quarry materials, obtainable by *mining and quarrying operations; and
 View history reference


(b) when you first use the asset, you do not use it for:

(i) development drilling for *petroleum; or

(ii) operations in the course of working a mining property, quarrying property or petroleum field; and
 View history reference


(c) you satisfy one or more of these subparagraphs at the asset's *start time:

(i) you carry on mining and quarrying operations;

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

(iii) you carry on a *business of, or a business that included, exploration or prospecting for minerals or quarry materials obtainable by such operations, and expenditure on the asset was necessarily incurred in carrying on that business; and
 View history reference


(d) in a case where the asset is a *mining, quarrying or prospecting right - you acquired the asset from an *Australian government agency or a *government entity; and
 View history reference


(e) in a case where the asset is *mining, quarrying or prospecting information:

(i) you acquired the asset from an Australian government agency or a government entity; or

(ii) the asset is a geophysical or geological data package you acquired from an entity to which subsection (1AA) applies; or

(iii) you created the asset, or contributed to the cost of its creation; or

(iv) you caused the asset to be created, or contributed to the cost of it being created, by an entity to which subsection (1AA) applies.
 View history reference

40-80(1A)  

(Repealed by No 96 of 2014)

40-80(1AA)  

 View history reference
This subsection applies to an entity if, at the time of the acquisition referred to in subparagraph (1)(e)(ii) or the creation referred to in subparagraph (1)(e)(iv), the entity predominantly carries on a *business of providing *mining, quarrying or prospecting information to other entities that:


(a) carry on *mining and quarrying operations; or


(b) it would be reasonable to conclude propose to carry on such operations; or


(c) carry on a business of, or a business that included, *exploration or prospecting for *minerals or quarry materials obtainable by such operations.

40-80(1AB)  

 View history reference
If an amount is included in the second element of the *cost of a *depreciating asset, subsection (1) applies in relation to that amount only if:


(a) your first use of the asset, after the inclusion of the amount in the second element, is for *exploration or prospecting for *minerals, or quarry materials, obtainable by *mining and quarrying operations; and


(b) at the time of that first use:


(i) you satisfy paragraph (1)(b) as if that first use was your first use of the asset; and

(ii) you satisfy paragraph (1)(c) as if the time of that first use was the asset's *start time; and


(c) if the amount relates to a *mining, quarrying or prospecting right - after the inclusion of the amount in the second element, you satisfy paragraph (1)(d) in relation to the right; and


(d) if the amount relates to *mining, quarrying or prospecting information - after the inclusion of the amount in the second element:

(i) you satisfy paragraph (1)(e) in relation to the information; or

(ii) you would satisfy that paragraph, in relation to the economic benefit that resulted in the inclusion of the amount in the second element, if that economic benefit were the asset referred to in that paragraph.
 View history reference

40-80(1AC)  

 View history reference
If subsection (1) does not apply to a *depreciating asset:


(a) the fact that subsection (1) does not apply to the asset does not prevent the application of subsection (1AB) to an amount included in the second element of the *cost of the asset; but


(b) subsection (1) only affects the asset's decline in value to the extent that the asset's cost consists of that amount.

Depreciating assets used for certain purposes

40-80(2)  

 [Proposed new 42-167(2)]
The decline in value of a *depreciating asset you start to *hold in an income year is the asset's *cost if:


(a) that cost does not exceed $300; and


(b) you use the asset predominantly for the *purpose of producing assessable income that is not income from carrying on a *business; and


(c) the asset is not one that is part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds $300; and


(d) the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed $300.


 



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