Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 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.

  (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.

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

Definitions

  (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.

  (5)   Minerals includes * petroleum.

  (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.

  (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.

  (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.