Income Tax Assessment Act (No. 2) 1968 (Cth)
An Act to amend the Law relating to Income Tax.
[Assented to 25 June 1968]
BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—
(2.) The
(3.) Section 1 of the
(4.) The Principal Act, as amended by this Act, may
be cited as the
(2.) The amendments of the Principal Act made by
sections 4 and 8, paragraph (
(3.) The amendment made by section 15 of this Act shall be deemed to have had effect from and including the twenty-third day of October, One thousand nine hundred and sixty-four.
“Division 10.—Mining (Sections 122aa–124da).”
and inserting in their stead the words and figures—
“Division 10.—General Mining (Sections 122—122s).
Division 10aaa.—Transport of Certain Minerals (Sections 123—123f).”.
(
a ) by inserting in paragraph (a )of the definition of “apportionable deductions” in sub-section (1.), after the words “section seventy-seven b”, the words “, section seventy-seven c”; and(
b )by inserting in sub-section (1.), after the definition of “live stock”, the following definition:—“‘minerals’ includes petroleum;”.
“Provided that, where, under Division 10 of Part III., or under the Division for which that Division was substituted, a deduction has been allowed or is allowable from the assessable income of the taxpayer of any year of income in respect of expenditure on exploration or prospecting in that area, this paragraph shall apply to so much only of the income as exceeds the sum of any deductions so allowed or allowable:”.
(
a ) by omitting paragraphs (b ) and (c ) of sub-section (10.) and inserting in their stead the following word and paragraph:—“or (
b )a deduction in respect of the expenditure has been allowed or is allowable under section sixty-two ab or one hundred and twenty-two e of this Act.”; and(
b ) by omitting from sub-section (11.) the words “section one hundred and twenty-four c” and inserting in their stead the words “section one hundred and twenty-two n”.
(
a )by inserting in sub-section (11.), after the words “sub-section (4.) of this section”, the words “, under section seventy-seven c of this Act”; and(
b )by inserting in sub-section (16.), after the word “under” (second and fourth occurring), the words “section seventy-seven c or”.
(
a )by omitting from sub-section (1.) the definition of “mining or prospecting outgoings” and inserting in its stead the following definition:—“‘mining or prospecting outgoings’, in relation to a mining company, means outgoings of the company in, or for the purposes of enabling the company to engage in, exploration or prospecting, or mining, in Australia for prescribed minerals, and, except as otherwise provided by this definition, includes all expenditure of the company that is allowable capital expenditure within the meaning of section one hundred and twenty-two a of this Act and all expenditure of a kind referred to in sub-section (1.) of section one hundred and twenty-two j of this Act, but does not include—
(
a )any other expenditure of a capital nature; or(
b )expenditure in the acquisition of a mining or prospecting right or mining or prospecting information;”;(
b )by omitting from sub-section (1.) the definition of “prescribed minerals “ and inserting in its stead the following definitions:—“‘prescribed minerals’ means minerals obtainable by prescribed mining operations;
‘prescribed mining operations’ has the same meaning as it has in Division 10 of Part III.”;
(
c )by omitting from sub-section (3.) the words “section one hundred and twenty-four da” and inserting in their stead the words “section one hundred and twenty-two q”;(
d ) by omitting from sub-section (6.) the words “and section one hundred and twenty-four da of this Act”; and(
e ) by inserting in sub-section (7.), after the word “under” (second and fourth occurring), the words “section seventy-seven c or”.
(
a )by omitting sub-section (3.) and inserting in its stead the following sub-sections:—“(3.) Where a company has paid to another company, not being a company the principal business of which relates to oil, calls on shares referred to in paragraph (
b )of sub-section (1.) of section seventy-eight of this Act and the company paying the calls was, at the time of paying the calls, the beneficial owner of all the issued shares in the company receiving the calls, the company paying the calls may, subject to sub-section (4.) of this section, lodge with the Commissioner a notice in writing stating that the company elects that this section shall apply in relation to such of those calls as are specified in the notice.“(3a.) Where a company has paid to another company, not being a company the principal business of which relates to petroleum, moneys that are, in relation to that other company, calls paid on shares within the meaning of the next succeeding section, and the company paying the calls was, at the time of paying the calls, the beneficial owner of all the issued shares in the company receiving the calls, the company paying the calls may, subject to the next succeeding sub-section, lodge with the Commissioner a notice in writing stating that the company elects that this section shall apply in relation to such of those calls as are specified in the notice and are specified in a declaration lodged under sub-section (2.) of the next succeeding section by the company receiving the calls. “; and
(
b ) by omitting from sub-section (6.) the words “paragraph (b )of sub-section (1.) of the next succeeding section” and inserting in their stead the words “the next succeeding section or paragraph (b )of sub-section (1.) of section seventy-eight of this Act”.
“77c.—(1.) In this section—
‘afforestation company’ means a company carrying on as its principal business afforestation in Australia;
‘Australia’ includes the Territory of Papua and New Guinea;
‘calls paid on shares’, in relation to a company, means moneys paid to the company after the ninth day of May, One thousand nine hundred and sixty-eight as calls in respect of shares in the company by the owners of the shares, but does not include—
(
a ) moneys paid to the company—(i) in respect of shares issued on or before the ninth day of May, One thousand nine hundred and sixty-eight; or
(ii) in respect of shares issued after that date, if the terms of the issue were announced on or before, or the shares were issued in pursuance of an agreement (other than the articles of association of the company) entered into on or before, that date; or
(
b )moneys paid to the company in respect of shares that are, or at the option of the company may become, liable to be redeemed;
‘company’ includes a syndicate;
‘exploration or prospecting’ means any one or more of the following:—
(
a )geological mapping, geophysical surveys, systematic search for areas containing minerals, and search by drilling or other means for minerals within those areas; and(
b )search for ore within or in the vicinity of an ore-body by drives, shafts, cross-cuts, winzes, rises and drilling,but does not include operations in the course of working a mining property;
‘mining or prospecting company’ means a company that carries on, or as to which the Commissioner is satisfied that it proposes to carry on, as its principal business mining in Australia for minerals, or exploration or prospecting in Australia for minerals obtainable by mining, or both;
‘prescribed outgoings’, in relation to a mining or prospecting company, means outgoings of the company on exploration or prospecting in Australia for minerals obtainable by mining;
‘syndicate’ means a partnership or co-adventure having a share capital and registered under the law of a State or Territory of the Commonwealth relating to mining partnerships.
“(2.) Subject to this section, a mining or prospecting company may, for the purposes of the next succeeding sub-section, before the expiration of one month after the end of the year of income in which the company has received calls paid on shares or within such further time as the Commissioner allows, lodge with the Commissioner a declaration in writing signed by the public officer of the company (or, in the case of a syndicate, by or on behalf of the members of the syndicate) that the company has expended, or proposes to expend, moneys specified in the declaration, being the whole or a part of all or any of those calls, upon prescribed outgoings.
“(3.) One-third of—
(
a )the amount of calls paid on shares paid by a person to an afforestation company; or(
b )so much of the amount of calls paid on shares paid by a person to a mining or prospecting company as is included in a declaration lodged by the company under the last preceding sub-section,shall, subject to this section, sub-section (11.) of section seventy-seven a, section seventy-seven b and section seventy-nine c of this Act, be an allowable deduction from the assessable income derived by that person in the year of income of that person in which the calls were paid.
“(4.) If, with respect to any of the moneys specified in a declaration lodged by a company under sub-section (2.) of this section, the Commissioner is not satisfied that those moneys have been or will be expended by the company in accordance with the declaration and no deductions have been allowed, by virtue of the declaration, in respect of calls paid on shares, the Commissioner may inform the company, by notice in writing given for the purposes of this sub-section and specifying the amount of the moneys, that he is not so satisfied, and, upon the company being so informed, the amount of any deduction otherwise allowable under the last preceding sub-section or under sub-section (5.) of section seventy-seven b of this Act by virtue of the declaration shall be reduced by an amount which bears to the amount of that deduction the same proportion as the amount of the moneys specified in the notice bears to the amount of the moneys specified in the declaration.
“(5.) Where, by virtue of a declaration lodged by a company under this section, the Commissioner has allowed any deductions in respect of calls paid on shares and the Commissioner becomes satisfied that any of the moneys specified in the declaration have been dealt with, or any of those moneys are, by virtue of the next succeeding sub-section, to be regarded as having been dealt with, otherwise than in accordance with the declaration, an amount equal to one-third of those moneys shall be included in the assessable income of the company of the year of income in which those moneys were so dealt with or are to be regarded as having been so dealt with.
“(6.) If—
(
a ) a company has lodged a declaration with the Commissioner under this section; and(
b )the manner in which moneys specified in the declaration have been dealt with by the company cannot be readily ascertained from the records of the company,
the Commissioner may, having regard to all the circumstances of the case, determine that, for the purposes of this section, those moneys shall be regarded as having been dealt with by the company in a particular manner in a particular year of income, and those moneys shall, for those purposes, be deemed to have been so dealt with by the company.
“(7.) Where moneys specified in a declaration lodged by a company under this section include moneys that the company is not entitled to specify in the declaration, the declaration is not invalid in relation to the moneys that the company is entitled to specify by reason only that the declaration also specifies the other moneys.”.
“(5.) Nothing in the preceding provisions of this section applies in relation to—
(
a ) a lease from the Crown of land used for primary production; or(
b )a lease that is a mining lease within the meaning of section eighty-eight b of this Act, or any other lease of land for mining purposes.”.
(
a )by omitting from sub-section (1.) the words “, and an election is not made under sub-section (5.) of this section in respect of the grant”;(
b )by omitting from sub-section (2.) the words “, and an election is not made under sub-section (5.) of this section in respect of the assignment”;(
c )by omitting from sub-section (3.) the words “, and an election is not made under sub-section (5.) of this section in respect of the surrender”;(
d )by omitting sub-section (5.) and inserting in its stead the following sub-sections:—“(5.) The parties to the grant, assignment or surrender of a lease may, by notice in writing signed by the parties and lodged with the Commissioner on or before the thirty-first day of August next succeeding the end of the financial year in which the lease was granted, assigned or surrendered or on or before such later date as the Commissioner determines, elect that this section shall not apply in relation to the grant, assignment or surrender and, subject to the next four succeeding sub-sections, where such an election is made, this Division applies in relation to the grant, assignment or surrender as if this section and section eighty-three aa had not been enacted.
“(5a.) An election under the last preceding sub-section shall not be made in relation to a lease other than a lease granted on or before, or in pursuance of an agreement entered into on or before, the ninth day of May, One thousand nine hundred and sixty-eight.
“(5b.) Except for the purposes of the application of section eighty-five of this Act, an election under sub-section (5.) of this section in relation to the assignment or surrender of a lease does not have effect unless the assignment or surrender—
(
a ) took effect on or before the ninth day of May, One thousand nine hundred and sixty-eight; or(
b )takes effect after that date in pursuance of an agreement entered into on or before that date.“(5c.) An election under sub-section (5.) of this section in relation to the assignment or surrender of a lease, being an assignment or surrender that took effect after the ninth day of May, One thousand nine hundred and sixty-eight does not have effect for the purpose of the application of section eighty-five of this Act unless the assignment or surrender is made by a person who acquired the lease on or before that date or in pursuance of an agreement entered into on or before that date or by a person who succeeded to the lease upon the death of such a person, and such an election does not have effect for the purpose of the application of section eighty-five of this Act—
(
a )in relation to an amount referred to in sub-section (1.) of section eighty-five of this Act that was paid in effecting improvements other than improvements referred to in sub-section (2.) of section eighty-eight of this Act, unless the assignment or surrender was made in pursuance of an agreement entered into on or before that date; or(
b )in relation to an amount referred to in sub-section (1.) of section eighty-five of this Act that was paid for the purpose referred to in paragraph (c ) of that sub-section, unless the amount was paid on or before that date or in pursuance of an agreement entered into on or before that date.“(5d.) An election under sub-section (5.) of this section does not have effect for the purposes of the application of section eighty-five, eighty-seven or eighty-eight of this Act in relation to improvements made after the ninth day of May, One thousand nine hundred and sixty-eight on land the subject of a lease with the written consent of the lessor of that land unless—
(
a )the written consent was given on or before that date; or(
b )the Commissioner is satisfied that, on or before that date, the lessor had agreed, whether absolutely or subject to conditions, to give that consent and the written consent was given within a period after that date which the Commissioner, on the joint application in writing of the lessor and the lessee made not later than sixty days from that date or within such further time as the Commissioner allows, has approved (whether before or after the giving of the consent) as reasonable for the purposes of this sub-section. “; and(
e )by omitting from sub-section (6.) the words “the last preceding sub-section” and inserting in their stead the words “sub-section (5.) of this section”.
(2.) An election made under sub-section (5.) of
section eighty-eight b of the
“Division 10.—General Mining.
“122.—(1.) In this Division—
‘Australia’ includes the Territory of Papua and New Guinea;
‘concentration’ means concentration by a gravity, magnetic, electrostatic or flotation process;
‘housing and welfare’, in relation to a taxpayer, means—
(
a )residential accommodation provided by the taxpayer at, or at a place adjacent to, the site of prescribed mining operations carried on by the taxpayer, being accommodationprovided for the use of employees of the taxpayer employed for the purposes of the operations of the taxpayer on that site or operations of the taxpayer connected with those operations, or for the use of dependants of such employees; and
(
b ) health, educational, recreational or other similar facilities, or facilities for the provision of meals, provided by the taxpayer at, or at a place adjacent to, the site of prescribed mining operations carried on by the taxpayer, being facilities that—(i) are provided principally for the welfare of such employees or of dependants of such employees; and
(ii) are not conducted for the purpose of profit-making by the taxpayer or any other person,
and includes works carried out directly in connexion with such accommodation or facilities, including works for the provision of water, light, power, access or communications;
‘mining or prospecting information’ means geological, geophysical or technical information, being information that relates to the presence, absence or extent of deposits of minerals, other than petroleum, in an area or is likely to be of assistance in determining the presence, absence or extent of such deposits in an area, and has been obtained from exploration or prospecting, or mining, for minerals;
‘mining or prospecting right’ means an authority, licence, permit or right to mine or prospect for minerals in a particular area in Australia, or a lease of land in Australia by virtue of which the lessee is entitled to mine or prospect for minerals on the land, and includes an interest in such an authority, licence, permit, right or lease and, for the purposes of provisions relating to the acquisition by a person of a mining or prospecting right from another person, also includes any rights in respect of buildings or other improvements (including housing and welfare) on the land concerned, or used in connexion with operations on the land concerned, that are acquired with the mining or prospecting right;
‘prescribed mining operations’ means mining operations on a mining property in Australia for the extraction of minerals, other than petroleum, from their natural site, being operations carried on for the purpose of gaining or producing assessable income;
‘prescribed purposes’ means the purposes for which allowable capital expenditure may be incurred or the purposes referred to in section one hundred and twenty-two j of this Act, and, in relation to property in respect of which the taxpayer incurred expenditure of a capital nature—
(
a )on or before the ninth day of May, One thousand nine hundred and sixty-eight; or(
b )after that date, in accordance with a contract made on or before that date,includes the purposes for which expenditure referred to in sub-section (1.) of section one hundred and twenty-two of the
Income Tax Assessment Act 1936–1967 could be incurred or purposes that were referred to in section one hundred and twenty-three aa of that Act;‘property’ includes a mining or prospecting right;
‘the
Income Tax Assessment Act 1936–1967’ includes theIncome Tax Assessment Act 1936 as amended by any Act up to and including theIncome Tax Assessment Act (No. 4) 1967;‘treatment’ means—
(
a )cleaning, leaching, crushing, grinding, breaking, screening, grading or sizing;(
b ) concentration; or(
c ) any other treatment applied to a mineral, being a treatment that is applied before concentration or, in the case of a mineral not requiring concentration, that would, if the mineral had required concentration, have been applied before the concentration,and, without extending, by implication, the processes that are included in this definition, is declared not to include—
(
d ) sintering or calcining; or(
e )the production of, or processes carried on in connexion with the production of, alumina, or pellets or other agglomerated forms of iron.
“(2.) A reference in this Division to a deduction or deductions allowed or allowable under this Division (not including a reference to a deduction or deductions allowed or allowable under a specified provision of this Division) shall, unless the contrary intention appears, be read as including a reference to a deduction or deductions allowed or allowable under the Division for which this Division was substituted.
“(3.) Where a taxpayer carries on prescribed mining operations on two or more mining properties, this Division shall, except to the extent to which a contrary intention appears, be construed as applying in relation to the operations of that taxpayer on and in connexion with each of those mining properties as if it were the only mining property on which the taxpayer carried on prescribed mining operations, and, for that purpose, amounts of expenditure (including expenditure on treatment plant or other plant for use in connexion with operations on two or more of those properties) or other amounts shall be apportioned in such manner as is reasonable.
“122a.—(1.) For the purposes of this Division, allowable capital expenditure of a taxpayer is expenditure of a capital nature incurred by the taxpayer, being—
(
a )expenditure in carrying on prescribed mining operations, including expenditure—(i) in preparing a site for such operations;
(ii) on buildings, other improvements or plant necessary for the carrying on by the taxpayer of such operations;
(iii) in providing, or by way of contribution to the cost of providing, water, light or power for use on, or access to or communications with, the site of prescribed mining operations carried on, or to be carried on, by the taxpayer; or
(iv) on housing and welfare;
(
b )expenditure on plant for use primarily and principally in the treatment of minerals obtained from the carrying on by the taxpayer of prescribed mining operations;(
c ) expenditure on buildings or plant for use directly in connexion with the operation or maintenance of plant referred to in the last preceding paragraph, or buildings or other improvements for use directly in connexion with the storage (whether before or after treatment) of minerals in relation to the operation of such plant; or(
d )expenditure on acquiring a mining or prospecting right or mining or prospecting information from another person, to the extent only of the amount of the expenditure that is specified in a notice under the next succeeding section duly given to the Commissioner by the taxpayer and that other person.
“(2.) Without extending, by implication, the operation of the last preceding sub-section, it is declared that the expenditure referred to in that sub-section does not include expenditure incurred by the taxpayer on or in relation to—
(
a )ships, railway rolling-stock or road vehicles, or railway lines, roads, pipelines or other facilities, for use wholly or partly for the purpose of the transport of minerals or products of minerals, other than transport wholly within the site of prescribed mining operations carried on by the taxpayer;(
b )works carried out in connexion with, or buildings or other improvements or plant constructed or acquired for use in connexion with, the establishment, operation or use of a port or other facilities for ships; or(
c ) an office building that is not situated at or adjacent to the site of prescribed mining operations carried on by the taxpayer.
“122b.—(1.) Where a person (in this section referred to as ‘the purchaser’) has incurred expenditure in acquiring from another person (in this section referred to as ‘the vendor’) for the purpose of carrying on prescribed mining operations, or exploration or prospecting for minerals obtainable by prescribed mining operations, a mining or prospecting right or mining or prospecting information, the purchaser and the vendor may give notice to the Commissioner that they have agreed to the inclusion in the allowable capital expenditure of the purchaser of an amount specified in the notice, being the whole or a part of that expenditure.
“(2.) If the amount specified in a notice given under this section in respect of a transaction exceeds the sum of—
(
a )so much of the capital expenditure (other than expenditure on plant or expenditure of a kind referred to in section one hundred and twenty-two j of this Act or in section one hundred and twenty-three aa of theIncome Tax Assessment Act 1936–1967) incurred by the vendor before the date of the transaction in relation to the area that is the subject of the right or to which the information relates as would have been included in the residual capital expenditure of the vendor as at the end of the year of income of the vendor during which the transaction occurred but for the transaction and any later transaction in relation to that area;(
b )any expenditure of the vendor (other than expenditure on plant in use by the vendor at the date of the transaction) of a kind referred to in section one hundred and twenty-two j of this Act or in section one hundred and twenty-three aa of theIncome Tax Assessment Act 1936–1967 incurred by the vendor before the date of the transaction that has not been allowed and is not allowable as a deduction to the vendor in the year of income in which the transaction takes place or in any prior year of income; and(
c ) so much of the allowable capital expenditure on housing and welfare incurred by the vendor in relation to the area that is the subject of the right or to which the information relates as is expenditure—(i) in respect of which section one hundred and twenty-two f of this Act has, by virtue of an election made by the vendor, become applicable; and
(ii) has not been allowed and is not allowable as a deduction to the vendor in the year of income in which the transaction takes place or in any prior year of income; and
(
d )the amount included in the vendor’s assessable income under section one hundred and twenty-two k of this Act in relation to property acquired by the purchaser from the vendor in connexion with the transaction,the amount specified in the notice shall, for all purposes of this Division, be deemed to be the amount in fact so specified less the amount of the excess.
“(3.) For the purposes of paragraphs (
“(4.) A notice under this section shall be deemed not to have been duly given where the notice relates to a lease in relation to the grant, assignment or surrender of which the persons giving the notice have (whether before or after the lodging of the notice with the Commissioner) made an election under sub-section (5.) of section eighty-eight b of this Act that has effect in relation to the grant, assignment or surrender.
“(5.) A notice under this section shall be in writing signed by or on behalf of the persons giving the notice and shall be lodged with the Commissioner not later than two months after the end of the year of income of the purchaser in which the right or information was acquired, or within such further time as the Commissioner allows.
“(6.) For the purposes of this section, where—
(
a )deductions have been allowed or are allowable under section seventy-seven aa of this Act in respect of moneys paid on shares specified in a declaration made by the vendor of a mining or prospecting right or mining or prospecting information; and(
b )as at the end of the year of income in which the right or information is disposed of there is an amount of net declared capital of the vendor for the purposes of section one hundred and twenty-two q of this Act that is not required to be applied by the Commissioner in accordance with sub-section (2.) of that section in the assessment of the vendor in respect of his income of that year of income,the sum of the amounts referred to in paragraphs (
a ), (b ) and (c ) of sub-section (2.) of this section shall be deemed to be reduced by that amount of net declared capital, or by such part of that amount as the Commissioner considers to be reasonably attributable to the right or information.
“122c.—(1.) For the purposes of this Division, but subject to the succeeding provisions of this section, the residual capital expenditure of a taxpayer as at the end of a year of income (in this section referred to as ‘the year of income’) shall be ascertained by deducting from the sum of—
(
a )so much of the amount which, for the purposes of section one hundred and twenty-two of theIncome Tax Assessment Act 1936–1967, was the residual capital expenditure of the taxpayer in relation to the mining property concerned at the end of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, as remains after deducting from that amount any part of that amount that has been allowed or is allowable as a deduction under that section from the assessable income of that year of income, less any part of that remaining amount that is attributable to expenditure of a kind referred to in section one hundred and twenty-three a of this Act; and(
b )the amount of allowable capital expenditure incurred by the taxpayer after the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, and before the end of the year of income,
any part of the expenditure included in that sum that—
(
c )has been allowed or is allowable as a deduction under section one hundred and twenty-two d of this Act from the assessable income of a year of income prior to the year of income;(
d )has been allowed or is allowable as a deduction under section one hundred and twenty-two e of this Act;(
e ) is expenditure in respect of which an election has been made by the taxpayer under section one hundred and twenty-two f of this Act;(
f ) was incurred on—(i) property which has, after the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, been disposed of, lost or destroyed; or
(ii) property the use of which by the taxpayer for prescribed purposes has, after that last-mentioned year of income, 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; or
(
g )not being expenditure to which the last preceding paragraph applies, is or has been, under section one hundred and twenty-two b of this Act, required to be taken into account in calculating the amount to be included in the allowable capital expenditure of a purchaser, by virtue of a notice duly given to the Commissioner under that section in relation to the acquisition from the taxpayer, during the year of income or a prior year of income, of a mining or prospecting right or mining or prospecting information.
“(2.) Where—
(
a )property referred to in sub-paragraph (ii) of paragraph (f ) of the last preceding sub-section;(
b ) property the use of which by the taxpayer for prescribed purposes has, before the commencement of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-eight, been terminated; or(
c ) property referred to in paragraph (b )of sub-section (3.) of section one hundred and twenty-two f of this Act,has, after the end of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, come into use for purposes for which allowable capital expenditure may be incurred, so much of the capital expenditure incurred on that property before the termination of use as the Commissioner determines shall, for the purposes of this section and of section one hundred and twenty-two f of
this Act, be deemed to have been incurred by the taxpayer, in the year of income in which the property so comes into use, for the purposes for which the property so comes into use.
“(3.) Where an amount of income derived by the
taxpayer in a year of income after the year of income that ended on the
thirtieth day of June, One thousand nine hundred and sixty-seven, from the
sale, transfer or assignment of rights to mine on any mining tenement is or has
been exempt from income tax by virtue of paragraph (
(
a )any excess amounts of expenditure referred to in sub-section (3.) of section one hundred and twenty-three aa of theIncome Tax Assessment Act 1936–1967 have, under that sub-section, been required to be deemed to be expenditure in respect of which the taxpayer was entitled to a deduction under section one hundred and twenty-two of that Act; or(
b ) any excess amounts of expenditure referred to in sub-section (3.) of section one hundred and twenty-two J of this Act have been or are required to be deemed to be allowable capital expenditure incurred in the first-mentioned year of income or a prior year of income,the residual capital expenditure of the taxpayer as at the end of the first-mentioned year of income shall be reduced by so much of those excess amounts as has not been allowed, and is not allowable, as a deduction under section one hundred and twenty-two of the
Income Tax Assessment Act 1936–1967 or under section one hundred and twenty-two d of this Act, but so that the total amount of the reductions under this section shall not exceed the amount of the exempt income.
“122d.—(1.) Where, as at the end of the year of income, there is, in relation to a taxpayer, an amount of residual capital expenditure, an amount ascertained in accordance with this section shall be an allowable deduction.
“(2.) Subject to the next succeeding sub-section, the deduction allowable is the amount ascertained by dividing the amount of residual capital expenditure referred to in the last preceding sub-section by—
(
a )a number equal to the number of whole years in the estimated life of the mine or proposed mine on the mining property, or, if there is more than one such mine, of the mine that has the longer or longest estimated life, as at the end of the year of income; or(
b ) twenty-five,whichever number is the less.
“(3.) Unless the taxpayer makes an election under the next succeeding sub-section in relation to the year of income, the amount, or the total of the amounts, of the deduction or deductions allowable under this section
shall not exceed an amount equal to so much of the assessable income of the year of income as remains after deducting all allowable deductions, other than deductions allowable under this section or under section one hundred and twenty-two j of this Act, and, where the total of the amounts of two 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.) A taxpayer may elect, in relation to a year of income specified in the election, that the last preceding sub-section shall not apply in respect of the taxpayer.
“122e.—(1.) A person who has incurred allowable capital expenditure, not being expenditure on housing and welfare or expenditure on acquiring a mining or prospecting right or mining or prospecting information, may elect that the provisions of this section shall apply—
(
a ) in the case of expenditure on a unit or units of plant referred to in the election—in respect of that expenditure; or(
b )in the case of other allowable capital expenditure—in respect of the whole, or a part specified in the election, of that expenditure.
“(2.) Expenditure to which an election made under the last preceding sub-section applies shall be an allowable deduction from the assessable income of the year of income in which the expenditure was incurred.
“122f.—(1.) A person who, in a year of income, has incurred allowable capital expenditure on housing and welfare in relation to a mining property may elect that the provisions of this section shall apply in respect of the whole of the expenditure so incurred.
“(2.) Where an election is made under the last preceding sub-section, one-fifth of the expenditure shall be an allowable deduction from the assessable income of the year of income in which the expenditure was incurred and from the assessable income of each of the next four succeeding years of income.
“(3.) Subject to sub-section (2.) of section one hundred and twenty-two c of this Act, where expenditure in respect of which an election has been made by the taxpayer under sub-section (1.) of this section was incurred on—
(
a )property that is disposed of, lost or destroyed; or(
b )property the use of which by the taxpayer for the purposes of housing and welfare is otherwise terminated,
a deduction in respect of that expenditure is not allowable under this section from the assessable income of the year of income in which the disposal, loss, destruction or termination of use takes place or from the assessable income of any subsequent year of income.
“122g.—(1.) Where, in accordance with the next succeeding sub-section, a person who is carrying on prescribed mining operations appropriates an amount of income derived in a year of income for the purposes of expenditure that would be allowable capital expenditure and an amount being the whole or part of the amount so appropriated is not expended in that year of income, he may elect to have this section applied in relation to the amount not expended.
“(2.) For the purposes of this section, an appropriation of income derived in a year of income may be made in that year of income or within two months after the end of that year of income, or within such further time as the Commissioner allows.
“(3.) So much of the amount in relation to which an election is made under this section as the Commissioner is satisfied will be, or is likely to be, not later than the end of the year of income next succeeding the year of income in which the amount appropriated was derived, expended as allowable capital expenditure shall be an allowable deduction from the assessable income of the year of income in which the amount appropriated was derived.
“(4.) Where, under this section, a deduction has been allowed or is allowable from the assessable income of a year of income, the assessable income of the year of income next succeeding that year of income shall include an amount equal to that deduction.
“(5.) Where, under section twenty-three a of this Act, a deduction, or part of a deduction, under this section has been required to be taken into account for the purpose of ascertaining the extent to which an amount of income derived by the taxpayer in a year of income and attributable to the production, or derived from the sale, of a metal or mineral is exempt from income tax—
(
a )the amount that, by reason of that deduction, is included in the assessable income of the taxpayer of the next succeeding year of income under the last preceding sub-section, or the part of that amount that is attributable to the amount that was so required to be taken into account, shall be deemed to be assessable income to which section twenty-three a of this Act applies; and(
b )the allowable deductions, or parts of allowable deductions, to be taken into account for the purposes of the application of that section in relation to that assessable income shall be such as the Commissioner thinks reasonable.
“(6.) A reference in this section to allowable capital expenditure shall be read as not including a reference to expenditure on housing and welfare or expenditure on acquiring a mining or prospecting right or mining or prospecting information.
“122h.—(1.) A person may elect that this section shall apply in respect of expenditure on a unit of plant referred to in the election incurred in the year of income specified in the election, and any further expenditure on.
that unit of plant incurred in a subsequent year and, where such an election has been made, expenditure to which the election applies shall be deemed not to be allowable capital expenditure for the purposes of this Division or expenditure referred to in the next succeeding section.
“(2.) The year of income specified in an election under this section shall be the first year of income in which the taxpayer incurs, in relation to the unit of plant referred to in the election, expenditure that, but for the election, would be allowable capital expenditure or expenditure referred to in the next succeeding section.
“122j.—(1.) Subject to this section, expenditure incurred by the taxpayer during the year of income on exploration or prospecting on any mining tenements in Australia for minerals obtainable by prescribed mining operations shall be an allowable deduction.
“(2.) A deduction is not allowable under this section unless, in the year of income, the taxpayer carried on a mining business or mining businesses (other than a business of mining for petroleum), and the amount of the deduction shall not exceed the amount remaining after deducting from the assessable income derived from the carrying on of that business or those businesses, and from the activities of the taxpayer associated directly or indirectly with the carrying on by him of that business or those businesses, all other allowable deductions (including deductions under this Division) that directly relate to any such business or activities.
“(3.) Where the amount of the expenditure exceeds the amount of the deduction allowable under this section, the excess shall, except for the purposes of section one hundred and twenty-two e of this Act, be deemed to be allowable capital expenditure incurred by the taxpayer in the first subsequent year of income in which the taxpayer carries on prescribed mining operations.
“(4.) Where an amount being the whole or part of an excess amount of expenditure referred to in the last preceding sub-section is, under section one hundred and twenty-two b of this Act, to be taken into account in calculating the amount to be included in the allowable capital expenditure of a purchaser by virtue of a notice duly given to the Commissioner under that section, that first-mentioned amount—
(
a )shall not, under the last preceding sub-section, be deemed to be allowable capital expenditure incurred by the vendor in the year of income in which the transaction to which the notice relates occurred or any subsequent year of income; and(
b )shall not be taken into account in calculating the amount to be included in the allowable capital expenditure of a purchaser by virtue of a notice given to the Commissioner under section one hundred and twenty-two b of this Act in respect of a transaction entered into after the first-mentioned transaction.
“(5.) Where—
(
a )an amount of income derived by the taxpayer in a year of income (in this sub-section referred to as ‘the year of sale’) after the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, from the sale, transfer or assignment of rights to mine on any mining tenement is or has been exempt from income tax by virtue of paragraph (p )of section twenty-three of this Act; and(
b )in relation to that tenement, there are any excess amounts of expenditure referred to in sub-section (3.) of this section that have not been, and are not required to be, deemed to be allowable capital expenditure incurred by the taxpayer in the year of sale or a prior year of income,
sub-section (3.) of this section does not operate so as to require the taxpayer to be deemed to have incurred, as allowable capital expenditure, in any year of income after the year of sale, any part of those excess amounts that does not exceed the amount that remains after deducting from that exempt income the amount, if any, by which, in relation to that tenement, the residual capital expenditure of the taxpayer at the end of the year of sale has been reduced under sub-section (3.) of section one hundred and twenty-two c of this Act.
“(6.) In this section, ‘exploration or prospecting’ means any one or more of the following:—
(
a )geological mapping, geophysical surveys, systematic search for areas containing minerals, and search by drilling or other means for minerals within those areas; and(
b )search for ore within or in the vicinity of an ore-body by drives, shafts, cross-cuts, winzes, rises and drilling,
but does not include operations in the course of working a mining property.
“122k.—(1.) This section applies where deductions have been allowed or are allowable, under this Division or under provisions of a previous law of the Commonwealth relating to the taxation of income derived from mining operations, in respect of expenditure of a capital nature by the taxpayer in respect of property of the taxpayer which, in the year of income, has been disposed of, lost or destroyed, or the use of which by the taxpayer for prescribed purposes has, in the year of income, been otherwise terminated.
“(2.) Where the aggregate of—
(
a )the sum of the deductions so allowed or allowable; and(
b )the consideration receivable in respect of the disposal, loss or destruction or, in the case of other termination of the use of property, the value of the property at the date of termination of use,
exceeds the total expenditure of a capital nature of the taxpayer in respect of that property, so much of the amount of the excess as does not exceed the sum of those deductions shall be included in the assessable income.
“(3.) Where the total expenditure exceeds that aggregate, the excess shall be an allowable deduction.
“(4.) In this section—
‘expenditure’ does not include expenditure in connexion with coalmining operations incurred before the year of income that commenced on the first day of July, One thousand nine hundred and fifty-one;
‘the consideration receivable in respect of the disposal, loss or destruction’ means—
(
a ) where the property is sold (whether with or without other property) for a specified price—the sale price of the property, less the expenses of the sale of the property, or such part of the expenses of the sale of the property together with the other property as the Commissioner determines;(
b )where the property is sold with other property and a specified price is not allocated to the property—such part of the total sale price, less the expenses of the sale, as the Commissioner determines;(
c ) where the property is disposed of otherwise than by sale—the value, if any, of the property at the date of disposal; or(
d )where the property is lost or destroyed—the amount or value received or receivable under a policy of insurance or otherwise in respect of the loss or destruction,but does not include an amount that is included, or will, when received, be included, in the assessable income of any year of income under section twenty-six ab of this Act or Division 4 of this Part.
“122l. Where—
(
a )a person has purchased from another person a unit of property (other than a mining or prospecting right)—(i) in respect of which the vendor had incurred capital expenditure of a kind in respect of which deductions are or have been allowable under this Division; or
(ii) the expenditure of the purchaser in acquiring which is expenditure of such a kind;
(
b )the Commissioner is satisfied that, having regard to any connexion between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm’s length; and(
c ) the purchase price is greater or less than the amount that, in the opinion of the Commissioner, was the value of the unit at the time of the purchase,
the purchase price shall, for all purposes of the application of this Act in relation to the vendor or the purchaser, be deemed to have been that amount.
“122m. An election under any of the provisions of this Division—
(
a )shall be made in writing signed by or on behalf of the taxpayer; and(
b ) shall be delivered to the Commissioner—(i) in the case of an election under section one hundred and twenty-two e or one hundred and twenty-two f of this Act—on or before the last day for the furnishing of the return of income of the year of income during which the expenditure was incurred;
(ii) in the case of an election under section one hundred and twenty-two g of this Act—on or before the last day for the furnishing of the return of income of the year of income in which the amount appropriated was derived; and
(iii) in the case of an election under section one hundred and twenty-two d or one hundred and twenty-two h of this Act—on or before the last day for the furnishing of the return of income of the year of income specified in the election,
or within such further time as the Commissioner allows.
“122n.—(1.) Where the whole or a part of expenditure of a capital nature incurred by a taxpayer has been allowed or is or may become allowable as a deduction under this Division, or under provisions of a previous law of the Commonwealth relating to the taxation of income derived from mining operations, that expenditure shall not be an allowable deduction, and shall not be taken into account in ascertaining the amount of an allowable deduction, from the assessable income of the taxpayer of any year of income under any provision of this Act other than a provision of this Division.
“(2.) The last preceding sub-section does not prevent a deduction for depreciation being allowed to a taxpayer in respect of a unit of property the use of which for prescribed purposes has been terminated, and where, by reason of the subsequent use of such a unit of property for a purpose other than a prescribed purpose, such a deduction becomes allowable, then, in the application of section fifty-six, fifty-seven aa, fifty-seven ab, fifty-eight or sixty-two of this Act in relation to that deduction—
(
a )the unit shall be deemed to have been acquired by the taxpayer at a cost equal to the amount that, in the opinion of the Commissioner, was the value of the unit at the date on which it commenced to be used for that purpose; and(
b )no part of the cost of the unit shall be taken to have been allowed or to be allowable under this Division as a deduction from the assessable income of the taxpayer of any year of income.
“(3.) For the purposes of sub-section (1.) of this section, an amount that would have been allowed or allowable as a deduction under this Division but for the operation of sub-section (3.) of section one hundred
and twenty-two d, or sub-section (2.) of section one hundred and twenty-two j, of this Act shall be deemed to have been allowed or to be allowable as such a deduction.
“122p. Notwithstanding
any other provision of this Act, where a taxpayer derives from the working of a
mining property income that is exempt from income tax in pursuance of paragraph
(
(
a )allowable capital expenditure of the taxpayer does not include expenditure related directly or indirectly to the operations on that mining property, other than expenditure (not being expenditure on housing and welfare) that was incurred for the purposes of the recovery of pyrites from ore mined on that property or the transport on that property of ore mined on that property and would not have been incurred if the assessable income derived from the working of that property had not been derived; and(
b )a deduction from assessable income, other than a deduction under section seventy-seven of this Act, shall not be allowed in respect of or in relation to—(i) losses or outgoings, not being losses or outgoings of capital or of a capital nature, incurred by the taxpayer in the year of income in relation to the working of the property, to the extent to which they would have been incurred if the assessable income derived from the working of that property had not been derived;
(ii) depreciation of a unit of plant used, or installed ready for use, in connexion with the working of that property, other than a unit of plant used in the recovery of pyrites from ore mined on that property or in the transport on that property of ore mined on that property and being a unit of plant that would not have been required if the assessable income derived from the working of that property had not been derived;
(iii) an amount appropriated by the taxpayer for expenditure for purposes that are, to any extent, related to gaining or producing that exempt income;
(iv) so much of an amount otherwise allowable as a deduction under sub-section (3.) of section one hundred and twenty-two k of this Act as, in the opinion of the Commissioner, should, having regard to the operation of the preceding provisions of this section, be excluded from the allowable deductions; or
(v) a premium paid by the taxpayer in relation to a lease of the mining property.
“122q.—(1.) In this section—
‘mining company’ has the same meaning as it has in section seventy-seven aa of this Act;
‘net declared capital’, in relation to a mining company, means the amount, ascertained as at the end of the year of income, that is the sum of the amount, if any, that was the net declared capital of the company for the purposes of section one hundred and twenty-four da of the
Income Tax Assessment Act 1936–1967 at the end of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-seven, the amounts received by the company after that last-mentioned year of income as moneys paid on shares and specified in a declaration or declarations duly lodged with the Commissioner by the company in pursuance of section seventy-seven aa of this Act and of any amount required to be added to the net declared capital in pursuance of sub-section (6.) of this section, less the sum of—(
a )any amounts that have been applied by the Commissioner in accordance with the next succeeding sub-section in the assessment of the income of the company of a year prior to the year of income; and(
b )any amounts by which the amount that would otherwise be the net declared capital is required to be reduced in pursuance of paragraph (c ) or (d ) of sub-section (3.) of this section;‘prescribed deduction’, in relation to a mining company, means—
(
a ) a deduction allowed or allowable, in an assessment of the income of the company, under any provision of this Division other than this section; or(
b )in the case of a company that has made an election in pursuance of section one hundred and twenty-two h of this Act, a deduction allowed or allowable under section fifty-four or fifty-nine of this Act in respect of plant specified in the election.
“(2.) In the assessment of the income of a mining company—
(
a ) that has at any time lodged a declaration or declarations under section seventy-seven aa of this Act;(
b )in respect of which there is, at the end of the year of income, an amount of net declared capital; and(
c ) which is, apart from this section, entitled in respect of the year of income to any prescribed deductions,
the Commissioner shall apply the whole or part of the amount of the net declared capital as at the end of the year of income in reduction of those prescribed deductions in accordance with the following provisions:—
(3.) For the purposes of section 123c of the
(4.) Where an excess amount of expenditure
referred to in sub-section (3.) of section 123aa
of the Principal Act has not been, and is not required to be, deemed, by
virtue of that sub-section, to be expenditure incurred in the year of income
that ended on the thirtieth day of June, One thousand nine hundred and
sixty-seven, or an earlier year of income, that excess amount shall, for the
purposes of the
(5.) Where a taxpayer made an election under
section 122ab of the
(6.) Where, in an assessment in respect of income
of a taxpayer for the year of income that ended on the thirtieth day of June,
One thousand nine hundred and sixty-seven, a deduction has been allowed or is
allowable under section 122b of
the
(7.) Where, in the year of income that commenced
on the first day of July, One thousand nine hundred and sixty-seven, a taxpayer
receives a payment that is a compensation payment within the meaning of section
124aa of the
(8.) Where—
(
a )a taxpayer has entered into an agreement with the Commonwealth or a State under which the taxpayer is to construct or install a plant for the processing of minerals obtained by mining operations carried on by the taxpayer or by the treatment of such minerals, being an agreement entered into on or before the ninth day of May, One thousand nine hundred and sixty-eight;(
b )under the agreement, the taxpayer is required (or is required, unless otherwise approved by the Commonwealth or the State) to construct or install the plant on or in the vicinity of the site of the mining operations;(
c ) in accordance with the agreement, the taxpayer undertakes the construction or installation of the plant on or in the vicinity of the site of the mining operations; and(
d )after the ninth day of May, One thousand nine hundred and sixty-eight capital expenditure in the construction or installation of the plant, or the construction of buildings or other improvements for use directly in connexion with the operation of the plant, is incurred by the taxpayer within the period permitted under the agreement for completion of the plant,
sub-sections (1.), (2.) and (3.) of this section apply as if the expenditure had been incurred under a contract for the acquisition of property by, or the performance of work for, the taxpayer entered into on or before the ninth day of May, One thousand nine hundred and sixty-eight.
included in the residual capital expenditure of
the taxpayer, for the purposes of Division 10 of Part III. of the
(
a )expenditure on exploration or prospecting for uranium incurred by the taxpayer during the period from the commencement of the year of income that began on the first day of July, One thousand nine hundred and fifty-two, to the end of the year of income that ends on the thirtieth day of June, One thousand nine hundred and sixty-eight;(
b )expenditure in connexion with mining operations in relation to uranium incurred by the taxpayer during the period from the commencement of the year of income that began on the first day of July, One thousand nine hundred and fifty-two, to and including the ninth day of May, One thousand nine hundred and sixty-eight, or incurred by the taxpayer after that period in accordance with a contract made during that period for the acquisition of property by, or the performance of work for, the taxpayer, being expenditure that would have been of the kind referred to in sub-section (1.) of section 122 of theIncome Tax Assessment Act 1936–1967 if the exemption provided by section 23d of that Act had not been provided; and(
c ) expenditure (not being expenditure that is referred to in the last preceding paragraph) in connexion with mining operations in relation to uranium incurred by the taxpayer in the year of income that ends on the thirtieth day of June, One thousand nine hundred and sixty-eight, being expenditure that would have been allowable capital expenditure within the meaning of Division 10 of Part III. of theIncome Tax Assessment Act 1936–1968 if the exemption provided by section 23d of that Act had not been provided.
(2.) Expenditure in relation to which this section applies, being—
(
a )expenditure of the taxpayer of the kind referred to in paragraph (a ) of the last preceding sub-section; or(
b )so much of the expenditure of the taxpayer of the kinds referred to in paragraphs (b ) and (c ) of the last preceding sub-section as exceeds the net exempt income from uranium,
shall, for the purposes of the
(3.) For the purposes of the last preceding
sub-section, “the net exempt income from uranium” means the income derived by
the taxpayer that is or was exempt from income tax by virtue of section 23d of the
any time, less any expenditure that would have been or would be allowable (in addition to any deduction that was or is allowable) as a deduction, other than a deduction under Division 10 of Part III. of that Act, or of that Act as amended, if the exempt income had been assessable income.
(4.) For the purposes of section 122k of the
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