On 29 May 2014 the Parliamentary Secretary to the Treasurer introduced the Tax and Superannuation Laws Amendment (2014 Measures No 3) Bill 2014 into the House of Representatives.
The Bill amends the capital allowance provisions in Division 40 of the Income Tax Assessment Act 1997. The amendments limit the scope of the immediate deduction for expenditure on mining, quarrying or prospecting rights (mining rights and mining, quarrying or prospecting information (mining information) first used in exploration. The limitation better targets the immediate deduction to genuine exploration activities.
The costs of mining rights and mining information will continue to be immediately deductible if acquired directly from a Commonwealth, State or Territory government body.
Expenditure incurred on generating new mining information will continue to be immediately deductible.
Expenditure incurred in obtaining geological and geophysical information data packages from specified providers will continue to be immediately deductible.
All other mining rights and mining information costs that would currently benefit from the immediate deduction that are excluded by the operation of this measure will be depreciable over either 15 years from the time the rights or information are first used, or their effective lives, whichever is the shorter period.
Where exploration on a particular tenement ceases, the taxpayer can choose to immediately deduct any remaining undepreciated value of the related mining rights and mining information. If the taxpayer then recommences exploration on the tenement, the taxpayer will be subject to a clawback of what would have been the residual value of the mining rights or mining information had the taxpayer not chosen an immediate deduction.
These amendments will apply to acquisitions of mining rights and mining information that occur after the announcement of the measure at 7.30 pm Australian Eastern Standard Time, 14 May 2013. However, the amendments do not apply to mining rights or mining information a taxpayer begins to hold after that time if the taxpayer did so by virtue of an arrangement entered into before the announcement.