Commonwealth Numbered Acts

Income Tax Laws Amendment Act (No. 3) 1981 No. 154 of 1981 - SECT 26

26. After section 124ADD of the Principal Act the following sections are
inserted: Residual (post 18 August 1981) capital expenditure

''124ADE. (1) For the purposes of this Division, but subject to the succeeding
provisions of this section, the residual (post 18 August 1981) capital
expenditure of a taxpayer as at the end of a year of income (in this section
referred to as the 'relevant year of income') shall be ascertained by
deducting from the sum of-

   (a)  the amount of allowable capital expenditure (other than allowable
        capital expenditure to which paragraph (b) applies) incurred by the
        taxpayer after 18 August 1981 and before the end of the relevant year
        of income, not being expenditure that was incurred-

        (i)    under a contract entered into on or before 18 August 1981; or

        (ii)   in respect of the construction of property by the taxpayer
               where that construction commenced on or before 18 August 1981;
               and

   (b)  any amount of allowable capital expenditure that is deemed by
        sub-section (2) to have been incurred by the taxpayer after 18 August
        1981, the following amounts:

   (c)  any part of the expenditure included in that sum that-

        (i)    has been allowed or is allowable as a deduction under section
               124ADF from the assessable income of a year of income preceding
               the relevant year of income; or

        (ii)   was incurred on property (not being property in respect of
               which a notice has been duly given to the Commissioner under
               section 124AB by the taxpayer and a person who acquired the
               last-mentioned property from the taxpayer) that has been
               disposed of, lost or destroyed or the use of which by the
               taxpayer for the purposes of carrying on prescribed petroleum
               operations has been otherwise terminated, and has not been
               allowed and is not allowable as a deduction from the assessable
               income of any year of income that ended before the year of
               income in which the disposal, loss, destruction or termination
               of use took place; and

   (d)  the sum of so much of any amounts specified in notices duly given to
        the Commissioner under section 124AB in relation to the acquisition
        from the taxpayer, during the relevant year of income or a preceding
        year of income, of a petroleum prospecting or mining right or
        petroleum prospecting or mining information as is attributable to
        expenditure that would, but for this paragraph, be included in the
        residual (post 18 August 1981) capital expenditure of the taxpayer as
        at the end of the relevant year of income.

''(2) Where-

   (a)  after 17 August 1976-

        (i)    the taxpayer has incurred allowable capital expenditure on
               property the use of which by the taxpayer for the purpose of
               carrying on prescribed petroleum operations has, before the
               relevant year of income, been terminated; or

        (ii)   the taxpayer has, otherwise than in carrying on prescribed
               petroleum operations, incurred expenditure of a capital nature
               on property, being expenditure that would have been allowable
               capital expenditure if it had been incurred in carrying on such
               operations; and

   (b)  the property has, after 18 August 1981, come into use by the taxpayer
        for purposes for which allowable capital expenditure may be incurred,
        so much of that expenditure as the Commissioner determines shall be
        deemed to have been incurred by the taxpayer in respect of that
        property, on the day on which the property so came into use by the
        taxpayer, for the purposes for which the property so came into use.

''(3) Nothing contained in section 122N prejudices the operation of
sub-section (2). Deduction of residual (post 18 August 1981) capital
expenditure

''124ADF. (1) Where, as at the end of the year of income, there is, in
relation to a taxpayer, an amount of residual (post 18 August 1981) capital
expenditure, an amount ascertained in accordance with this section is an
allowable deduction.

''(2) Subject to sub-section (3), the deduction allowable is the amount
ascertained by dividing the amount of residual (post 18 August 1981) capital
expenditure referred to in sub-section (1) by a number equal to the number of
whole years in the estimated life of the petroleum field or proposed petroleum
field as at the end of the year of income or by 10, whichever number is the
less.

''(3) The amount of the deduction, or the total of the amounts of the
deductions, allowable under this section shall not exceed an amount equal to
so much of the assessable income of the taxpayer of the year of income as
remains after deducting from that assessable income all deductions allowable
otherwise than under this section and section 124AH in respect of that
assessable income and, where the total of the amounts of 2 or more deductions
that would be allowable under this section but for this sub-section exceeds
the maximum amount determined in accordance with this sub-section, those
deductions shall be reduced respectively by amounts proportionate to those
deductions and equal in total to the excess.

''(4) Where, having regard to the information in his possession, the
Commissioner is not satisfied that the estimated life of a petroleum field or
proposed petroleum field as made by the taxpayer is a reasonable estimate, the
estimated life shall, for the purposes of sub-section (2), be taken to be such
period as the Commissioner considers reasonable.''.