Document ID: chunk:federal_register_of_legislation:C2010C00576:clause:2_8:p1
Version: federal_register_of_legislation:C2010C00576
Segment Type: clause
Provision Reference: sch 2 cl 8 (pt 1/4)
Character Range: 16577–19077

8  After section 40‑35
Insert:

40‑37  Post‑30 June 2001 mining expenditure

 (1) This section applies to you if:
 (a) you incur expenditure after 30 June 2001 under a contract entered into before that day; and
 (b) the expenditure would have been allowable capital expenditure, and you could have deducted an amount for it, under Division 330 of the former Act if you had incurred it before 1 July 2001; and
 (c) the expenditure does not relate to a depreciating asset.

 (2) Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset) you hold on this basis:
 (a) it has a cost at the time you incur the expenditure equal to the amount of the expenditure; and
 (b) in applying the formula in section 40‑75 of the new Act for the income year in which you incur the expenditure—you use the adjustments in subsection 40‑75(3) of the new Act; and
 (c) it is taken to be used for a taxable purpose when you incur the expenditure; and
 (d) it has an effective life worked out under subsection (3); and
 (e) you must use the prime cost method.

Note: There are special rules for entities that have substituted accounting periods: see section 40‑65.

 (3) The effective life of the notional asset at the start of an income year (present income year) for which you are working out its decline in value is:
 (a) for an amount of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining—the lesser of 10 and the 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 longest estimated life, as at the end of the present income year; or
 (b) for an amount of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining—the lesser of 10 and the 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 present income year; or
 (c) for an amount of expenditure incurred in carrying on eligible quarrying operations—the lesser of 20 and the number equal to the number of whole years in the estimated life of the quarry, or proposed quarry, on the quarrying property, or, if there is more than one such quarry, of the quarry that has the longest estimated life, as at the end of the present income year.

 (4) Sections 40‑95 and 40‑110 of the new Act do not apply to