ATO ID 2003/821: Capital Allowances: bowling greens constructed from synthetic or artificial materials
Date of decision: 25 August 2003
Year of income: Year ended 30 June 2003
Business line: Private Groups and High Wealth Individuals

Issue
Can a taxpayer deduct an amount under Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997) for capital expenditure incurred in the construction of a bowling green from synthetic or artificial materials?

Decision
Yes. The taxpayer can deduct an amount under Division 43 of the ITAA 1997 for capital expenditure incurred in the construction of a bowling green from synthetic or artificial materials.

Facts
The taxpayer is a sporting club and constructed a bowling green from synthetic or artificial materials.

Reasons for decision
Summary: In order to deduct an amount for the bowling green constructed from synthetic or artificial materials under Division 43 of the ITAA 1997, the bowling green must first be a capital work to which Division 43 of the ITAA 1997 applies. Subsection 43-20(2) of the ITAA 1997 provides that Division 43 of the ITAA 1997 applies to capital works being structural improvements begun after 26 February 1992. Subsection 43-20(3) of the ITAA 1997 gives some examples of those structural improvements. In particular, paragraph 43-20(3)(a) of the ITAA 1997 lists sealed roads, sealed driveways, sealed car parks, sealed airport runways, bridges, pipelines, lined road tunnels, retaining walls, fences, concrete or rock dams and artificial sports fields as examples of structural improvements. Further, subsection 43-20(4) of the ITAA 1997 provides that Division 43 of the ITAA 1997 does not apply to certain structural improvements. In particular, paragraph 43-20(4)(b) of the ITAA 1997 excludes structural improvements being earthworks that merely create artificial landscapes, for example, grass golf course fairways and greens, gardens, and grass sports fields. Therefore, a bowling green constructed from synthetic or artificial materials would be a structural improvement under paragraph 43-20(3)(a) of the ITAA 1997 and would not be excluded under paragraph 43-20(4)(b) of the ITAA 1997. As such, a bowling green constructed from synthetic or artificial materials is a capital work to which Division 43 of the ITAA 1997 applies. Consequently, an amount can be deducted under Division 43 of the ITAA 1997 for this type of bowling green.

Legislative references: Income Tax Assessment Act 1997 Division 43 subsection 43-20(2) subsection 43-20(3) paragraph 43-20(3)(a) subsection 43-20(4) paragraph 43-20(4)(b)
Related ATO interpretative decisions: ATO ID 2003/820
Subject references: Construction expenditure area Uniform capital allowances system