There are specific deductions for expenditure to do with mining and quarrying. The type of deduction available depends on what stage of the mining or quarrying process the expenditure relates to.

For the mining industry, certain income is made exempt from income tax.

(1) This Division has rules that are specific to mining and quarrying.

(2) It includes mining for *petroleum (petroleum mining) within the general scope of the term mining. Minerals is defined in subsection 330-25(1) to include *petroleum.

(3) Mining in general, quarrying and *petroleum mining are treated as the same in most ways by this Division. Where there are differences, this Division explicitly tells you.

The diagram on the next page shows how this Act treats the mining and quarrying industries. However, it does not show all stages of the mining or quarrying process.

Two topics that this Division covers are not shown on the diagram:

(1) Expenditure (whether of a capital nature or not) you incur in the 1997-98 income year or a later income year on *exploration or prospecting for *minerals, or *quarry materials, obtainable by *eligible mining or quarrying operations is deductible for that income year.

(2) However, you can deduct it only if during that income year you satisfy one or more of the tests set out in the following table:

(1) Exploration or prospecting includes:

(2) The following are not exploration or prospecting:

(1) Minerals includes *petroleum.

(2) Petroleum means:

(3) Quarry materials means any materials obtained by quarrying.

(1) Eligible mining or quarrying operations means *eligible mining operations or *eligible quarrying operations.

(2) Eligible mining operations means:

(3) Eligible quarrying operations means quarrying operations on a quarrying property for extracting *quarry materials from their natural site for the *purpose of producing assessable income. It does not include *eligible mining operations.

You cannot deduct an amount of expenditure if:

(1) If you incur expenditure on *plant that is deductible under section 330-15, you may elect not to deduct the expenditure under that section.

(2) If you so elect:

(3) You must make the election before the time by which you must lodge your *income tax return for the first income year in which you incur expenditure on that *plant. However, the Commissioner may allow you to do it later than that time.

(1) If you are a *genuine prospector, your *ordinary income (for the 1997-98 income year or a later income year) from the sale, transfer or assignment of your rights to mine, in a particular area in Australia, for:

is exempt from income tax.

(2) The exemption only applies to so much of the *ordinary income as exceeds the sum of:

(3) A genuine prospector is:

(4) The exemption does not apply if:

If you incur *allowable capital expenditure in the 1997-98 income year or a later income year, an amount worked out under section 330-100 or 330-110 is deductible in respect of that expenditure for that income year and for a number of later income years.

Allowable capital expenditure is capital expenditure you incur that is expenditure:

Capital expenditure you incur on *housing and welfare in carrying on *eligible mining operations is also allowable capital expenditure, but only if:

(1) Expenditure on or in relation to the following is not allowable capital expenditure:

(2) Expenditure on *housing and welfare incurred in carrying on *eligible quarrying operations is not allowable capital expenditure.

(3) There is no implication that the expenditure referred to in subsections (1) and (2) would otherwise have been allowable capital expenditure as defined by section 330-85.

(1) The amount deductible under section 330-80 for a particular income year (the current income year) is worked out using this formula:

where:

unrecouped expenditure has the meaning given by section 330-105.

years remaining has a varying meaning, depending on whether the *allowable capital expenditure was incurred in:

(2) For expenditure incurred in carrying on *eligible mining operations other than in the course of *petroleum mining, years remaining means:

whichever number is less.

(3) For expenditure incurred in carrying on *eligible mining operations in the course of *petroleum mining, years remaining means:

whichever number is less.

(4) For expenditure incurred in carrying on *eligible quarrying operations, years remaining means:

whichever number is less.

(5) An estimate required by this section must be reasonable.

(1) The unrecouped expenditure is the amount worked out by taking away from the amount of the *allowable capital expenditure that is deductible the sum of:

(2) In working out the unrecouped expenditure, disregard:

(1) If:

an amount worked out under subsection (2) is deductible in respect of that expenditure for that income year and for a number of later income years.

(2) The amount deductible under subsection (1) is:

If a particular amount of *allowable capital expenditure is covered by both of the following categories:

the amount must be apportioned between the 2 categories reasonably.

If:

so much of that expenditure as is reasonable is, for the purposes of this Division, taken to have been incurred by you on that property, on the day when the property so came back into use.

(1) This section applies if you carry on *eligible mining or quarrying operations on 2 or more mining properties, quarrying properties or *petroleum fields.

(2) This Subdivision applies to your operations on and in connection with each of those properties or fields as if it were the only property or field on which you carried on *eligible mining or quarrying operations.

(3) In applying this Subdivision in relation to a mining property, quarrying property or *petroleum field:

This Subdivision treats certain exploration or prospecting cash bidding payments and mining cash bidding payments as capital expenditure for the purposes of this Division. This does not apply to quarrying.

Each *mining cash bidding payment you pay is, for the purposes of this Division, capital expenditure incurred by you:

(1) A mining cash bidding payment is an amount paid for the grant of a *mining authority, but only if:

(2) A mining authority is any permit, licence, lease or other authority that:

If:

the amount of the payment is, for the purposes of this Division, capital expenditure you incur at the time of payment.

(1) An exploration or prospecting cash bidding payment is an amount paid for the grant of an *exploration or prospecting authority, but only if:

(2) An exploration or prospecting authority is any permit, licence, lease or other authority (other than a *mining authority) that:

(1) If:

you are taken for the purposes of this Division to have incurred, when the mining authority is granted, capital expenditure in relation to the qualifying interest or interests of an amount equal to the eligible cash bidding amount.

(2) A cash bidding exploration or prospecting authority is an *exploration or prospecting authority in respect of which an *exploration or prospecting cash bidding payment is or was made.

(3) You have a qualifying interest in relation to an *exploration or prospecting authority if you are the holder of, or of an interest in, the authority or a *retention authority that is related to it.

If, at a particular time (the test time):

then the person is taken to have at the test time in relation to the authority an entitlement to an eligible cash bidding amount equal to the amount of the excess.

If:

the buyer and seller may agree to transfer to the buyer so much of the seller’s entitlement to the eligible cash bidding amount as is specified in the agreement.

An agreement under section 330-180 must specify, as the amount of the entitlement that is to be transferred to the buyer, an amount that does not exceed:

less:

An agreement under section 330-180 must be made no later than 2 months after the end of the income year of the buyer in which the acquisition occurred, or later if the Commissioner allows.

An agreement under section 330-180 must be in writing and signed by the buyer and the seller.

A *mining authority is related to an *exploration or prospecting authority if, because of the grant of the mining authority:

ceases to be in force in respect of the whole or part of the area in respect of which the mining authority is granted.

A retention authority is any permit, licence, lease or other authority in relation to an area (other than a *mining authority) that:

A *retention authority is related to an *exploration or prospecting authority if, because of the grant of the retention authority, the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the retention authority is granted.

If an *exploration or prospecting authority (the original authority) or a *retention authority (also the original authority) is renewed, the renewed authority is taken to be a continuation of the original authority, even if the renewal is not granted in respect of all of the area in respect of which the original authority was granted.

If a person (the buyer) has incurred expenditure in acquiring from another person (the seller) for the purpose of carrying on *eligible mining or quarrying operations, or *exploration or prospecting for *minerals or *quarry materials obtainable by such operations:

the buyer and the seller may agree to include in the *allowable capital expenditure of the buyer an amount specified in the agreement.

(1) A mining, quarrying or prospecting right is:

However, a right in respect of anything covered by the definition of *housing and welfare in relation to a quarrying site is not a mining, quarrying or prospecting right.

(2) Mining, quarrying or prospecting information is geological, geophysical or technical information that:

and has been obtained from *exploration or prospecting, or *eligible mining or quarrying operations.

(1) The amount included in the agreement cannot exceed:

less:

(2) The amount included also cannot exceed the total of:

(3) If the agreement specifies more than the maximum amount that this section allows to be included in the agreement, that maximum amount is taken to be specified in the agreement instead.

For the purposes of paragraph 330-245(2)(a), the capital expenditure incurred by the seller in relation to an area the subject of a *mining, quarrying or prospecting right only includes capital expenditure on buildings or other improvements if the buyer acquires rights in respect of them with the right.

An agreement under section 330-235 must be made no later than 2 months after the end of the income year of the buyer in which the right or information was acquired, or later if the Commissioner allows.

An agreement under section 330-235 must be in writing and signed by the buyer and the seller.

If:

any agreement made under section 330-235 in respect of that expenditure has no effect for the purposes of this Subdivision.

(1) By specifying an amount in an agreement, the seller gives up the right to any further deductions in respect of the *allowable capital expenditure or *exploration or prospecting expenditure that the amount is attributable to.

(2) For the purposes of this Division, an amount specified in an agreement made under section 330-235 is taken to be wholly attributable to expenditure incurred by the seller.

(3) The extent to which such an amount is attributable to particular expenditure, to expenditure of a particular class, or to expenditure incurred at a particular time or during a particular period, must be determined reasonably.

If a particular amount to which a paragraph of subsection 330-245(2) applies is both:

the amount must be apportioned between the 2 categories reasonably.

Your deductions under Subdivision 330-A or 330-C for the income year are limited so that they cannot contribute to a tax loss. You can elect that the limit not apply.

(1) The total of your deductions under Subdivision 330-C for the income year cannot exceed your *available assessable income.

(2) Your available assessable income is worked out by subtracting from your total assessable income all deductions except:

(If the result is zero or less, your available assessable income is nil.)

(3) If the total of the deductions referred to in subsection (1) would otherwise exceed your *available assessable income, those deductions are reduced proportionately so that their total equals it.

(4) This section has effect subject to section 330-315 (which allows you to elect not to limit the amounts deductible under Subdivision 330-C).

(1) If (apart from this Subdivision) you would have deductions under Subdivision 330-A and deductions under Subdivision 330-C, apply this section after section 330-300.

(2) The total of your deductions under Subdivision 330-A for the income year cannot exceed your *available assessable income.

(3) Your available assessable income is worked out by subtracting from your total assessable income all deductions except the deductions referred to in subsection (2). (If the result is zero or less, your available assessable income is nil.)

(4) If the total of the deductions referred to in subsection (2) would otherwise exceed your *available assessable income, those deductions are reduced proportionately so that their total equals it.

(5) This section has effect subject to section 330-315 (which allows you to elect not to limit the amounts deductible under Subdivision 330-A).

(1) If the whole or part of a deduction you have for an income year is disallowed under section 330-300, 330-305 or 330-315, you can deduct that whole or part under section 330-15 or 330-80 (as appropriate) for the next income year for which you have assessable income.

(This is in addition to any other amount you can deduct under that section for that income year.)

(2) You can deduct an amount for an income year under section 330-15 because of this section only if you satisfy the requirements in that section.

(3) An amount you can deduct under section 330-15 or 330-80 because of this section is subject to the limit in section 330-300 or 330-305 (as appropriate) in the same way as any other amount you can deduct under section 330-15 or 330-80.

(4) This section has effect subject to sections 330-320, 330-325 and 330-330 (which are about excess amounts not being deductible).

(1) You may elect that your deductions under Subdivision 330-A or 330-C for the income year not be limited by your *available assessable income. If you have deductions under Subdivision 330-A and deductions under Subdivision 330-C, you may elect in relation to your deductions under one or both of the Subdivisions.

(2) If you make an election, section 330-300 or 330-305 does not limit or reduce your deductions under the relevant Subdivision for the income year.

(3) However, if (apart from the election) section 330-300 or 330-305 would limit or reduce the amounts (the previous excess deductions) that you could otherwise deduct under the relevant Subdivision for the income year because of section 330-310, they are instead reduced proportionately so that their total equals the amount worked out by:

(4) You must make an election before the time by which you must lodge your *income tax return for the income year. However, the Commissioner may allow you to do it later than that time.

If:

you cannot deduct the relevant amount for that income year or for a later income year.

If:

you cannot deduct the relevant amount for that income year or for a later income year.

(1) This section applies if:

(2) Each of those deductions is reduced in turn by so much of the *exempt income as:

(3) If you have 2 or more amounts of *exempt income relating to the same area, subsection (2) applies to each of them in turn.

(1) You can deduct a payment of *petroleum resource rent tax, or an *instalment of petroleum resource rent tax, that you make in the 1997-98 income year or a later income year.

(2) You cannot deduct under subsection (1) a payment that you make under paragraph 99(c) of the Petroleum Resource Rent Tax Assessment Act 1987.

(3) If:

the amount refunded, credited, paid or applied is included in your assessable income for the income year in which it is refunded, credited, paid or applied.

(4) This section can apply to you in your personal capacity or in your capacity as agent or trustee. Each application is separate from the other.

(5) An instalment of petroleum resource rent tax is an instalment of tax payable under Division 2 of Part VIII of the Petroleum Resource Rent Tax Assessment Act 1987.

(6) Petroleum resource rent tax means tax imposed by the Petroleum Resource Rent Tax Act 1987, as assessed under the Petroleum Resource Rent Tax Assessment Act 1987.

If you incur *transport capital expenditure in the 1997-98 income year or a later income year, an amount worked out under section 330-395 is deductible in respect of that expenditure for a number of income years, starting with the first income year in which the facility in respect of which the expenditure was incurred is used primarily and principally for *mining or quarrying transport.

(1) Transport capital expenditure is capital expenditure you incur, in carrying on a *business for the purpose of gaining or producing assessable income, on:

(2) Transport capital expenditure also includes capital expenditure you incur, in carrying on a *business for the purpose of gaining or producing assessable income, by way of contribution to:

(3) Transport capital expenditure does not include expenditure on:

and does not include expenditure by way of contribution to such expenditure (except expenditure by way of contribution to a *public body’s capital expenditure on railway rolling-stock).

330-380 Meaning of transport facility and public body

(1) A transport facility is a railway, a road, a pipe-line, a port facility or other facility for ships, or another facility, that is used primarily and principally for *mining or quarrying transport.

(2) A public body is any of the following:

(1) Mining or quarrying transport is transport of either of the following:

(2) However, the following are not mining or quarrying transport:

(1) Processed materials are any of the following:

(2) Treatment means:

but does not include:

(3) Concentration means concentration by a gravity, magnetic, electrostatic or flotation process.

The amount deductible in respect of *transport capital expenditure is:

If *transport capital expenditure was incurred on:

no amount in respect of that expenditure is deductible under section 330-395 from your assessable income either:

If:

so much of the expenditure on the property as is reasonable, is taken to be *transport capital expenditure incurred in the income year that the property came back into such use.

If a particular amount is covered by both of the following categories:

the amount must be apportioned between the 2 categories reasonably.

(1) A deduction is only available under this Subdivision in respect of capital expenditure on, or by way of contribution to, a port facility or other facility for ships if:

(2) In applying subsection (1), ignore the effect of subsection 330-590(1) (which is about mining or quarrying deductions taking priority).

(1) Expenditure (whether of a capital nature or not) you incur in the 1997-98 income year or a later income year, to the extent it is on *rehabilitation, is deductible for the income year in which it is incurred.

(2) However, a provision of this Act (except Division 8 (which is about deductions)) that expressly prevents or restricts the operation of that Division applies in the same way to this section.

(1) Rehabilitation is an act of restoring or rehabilitating a site or part of a site to, or to a reasonable approximation of, its *pre-mining condition. The site must be:

(2) Partly restoring or rehabilitating such a site counts as rehabilitation (even if you had no intention of completing the work).

(3) The pre-mining condition of a site is the condition the site was in before *eligible mining or quarrying operations, *exploration or prospecting or *ancillary activities were first commenced on the site, whether by you or by someone else.

(4) In the case of an *eligible building site, the time when *ancillary activities were first commenced on the site is the earliest time when the buildings, improvements or *plant concerned were located on the site.

(1) Any of the following are ancillary activities:

(2) An eligible building site is a site, or a part of a site, where there are:

that are or were necessary for you to carry on *eligible mining or quarrying operations. However, an eligible building site does not include anything covered by the definition of *housing and welfare.

(1) Expenditure in respect of the following is not deductible under section 330-435:

(2) Capital expenditure on *housing and welfare is not deductible under section 330-435.

(3) Expenditure is not deductible under section 330-435 to the extent to which it is taken into account in calculating an amount of depreciation that is deductible under this Act.

(1) For the purposes of this Act, if you use property for *rehabilitation, that use is taken to be for the *purpose of producing your assessable income.

(2) However, subsection (1) is subject to a provision of this Act that expressly provides that a particular use of property is taken not to be for the *purpose of producing assessable income.

A balancing adjustment is required if, for any reason, you no longer use particular property for mining or quarrying.

(1) A balancing adjustment is required if:

(2) A balancing adjustment is also required if:

(3) A qualifying purpose is a purpose that qualifies expenditure on the property for a deduction under Subdivision 330-A or 330-C.

(4) You are also taken to use the property for a qualifying purpose if you use it (or merely hold it in reserve and install it ready to be used) for *rehabilitation of a site on which you carried on *eligible mining or quarrying operations, or *exploration or prospecting, but only if the property is:

(5) The excess deduction rules are:

(6) If there is a change in ownership of part of an interest in property, the person whose ownership has changed is taken, for the purposes of this section, to have disposed of that part. But this subsection does not apply if section 330-520 (which is about a partial change of ownership) applies to the change.

(1) You make the adjustment by comparing:

with:

(2) If the *termination value exceeds the *written down value, you include the amount of the excess in your assessable income. However, the amount included cannot exceed the sum of the amounts covered by paragraph 330-480(1)(a) (your deductions).

(3) If the *termination value is less than the *written down value, you deduct the difference.

(1) The termination value is:

(2) But the termination value does not include an amount that is, or will, when received, be, included in your assessable income for any income year as a lease premium.

(1) The written down value is:

less:

(2) If the balancing adjustment is required because of subsection 330-480(2), the written down value is the total capital expenditure referred to in subsection (1) of this section.

If, because of subsection 330-480(6), you are taken to have disposed of part of an interest in property, the written down value is:

multiplied by:

(1) This section applies if:

(2) This Division applies as if the person or persons who owned the property before the change (the transferor) had, when the change happened, disposed of the whole of the property to the person, or all of the persons, who own the property after the change (the transferee).

(3) The transferor is required to do a balancing adjustment under Subdivision 330-J in relation to the disposal. The consideration for the disposal is taken to be equal to the market value of the property immediately before the change.

(4) However, the transferor and the transferee may jointly elect for roll-over relief, in which case Common rule 1 (which is about roll-over relief) applies to the disposal.

(5) An election under subsection (4) must:

(6) If a person dies before the end of the time allowed for jointly electing for roll-over relief, the trustee of the person’s estate may be a party to the election.

Common rules 1 to 3 apply to expenditure in respect of which a deduction is allowed under this Division.

(1) Section 330-547 sets out further situations where roll-over relief is available in relation to disposals of property.

(2) Sections 330-550 and 330-555 set out additional consequences that apply if roll-over relief is available:

(1) Roll-over relief is available if:

(2) Roll-over relief is also available if the transferor and the transferee jointly elect for it under subsection 330-520(4).

(1) The transferee’s entitlement to a deduction under section 41-30 includes the entitlement, because of section 330-310, to deduct an amount under section 330-15 or 330-80 in respect of the property.

(2) If the property disposed of is a *mining, quarrying or prospecting right or *mining, quarrying or prospecting information:

(3) If:

then:

If the property is a lease that is a *mining, quarrying or prospecting right, an election under subsection 88B(5) of the Income Tax Assessment Act 1936 (whether made before or after the disposal) has no effect in relation to the grant, assignment or surrender of the lease.

(1) Common rule 2 (Non-arm’s length transactions) applies as set out in this section.

(2) Subsection 41-65(1) applies only if:

(3) If subsection 41-65(1) applies, it has a wider operation in 2 ways.

First, it also operates if the amount of the expenditure is less than the market value of what the expenditure is for.

Second, if the amount of the expenditure is greater than or less than that market value, the amount of the expenditure is taken, for the purposes of applying this Act to both parties, to be that market value.

(4) Subsection 41-65(2) applies only if the transaction is a sale of property (except a *mining, quarrying or prospecting right).

(5) If subsection 41-65(2) applies, it has a wider operation in 3 ways.

First, it also operates if the seller receives an amount under the sale that is greater than the market value of what the amount is for.

Second, if the amount the seller receives under the sale is greater than or less than that market value, that amount is taken, for the purposes of applying this Act to both parties, to be that market value.

Third, it also operates if the seller has incurred capital expenditure in respect of the property that qualified for a deduction under Division 10, 10AAA or 10AA of the Income Tax Assessment Act 1936.

This Subdivision sets out some rules that do not fit neatly elsewhere in this Division.

(1) If:

this Division applies to you (and is taken always to have applied to you) as if the capital expenditure had never been incurred.

(2) If you receive, or become entitled to receive, an amount that constitutes to an unspecified extent recoupment of capital expenditure, the extent of the recoupment must, for the purposes of subsection (1), be determined reasonably.

(3) Section 170 of the Income Tax Assessment Act 1936 does not stop the Commissioner amending, at any time, your assessment for an income year in order to give effect to this section.

(1) If an amount in respect of capital expenditure is deductible by you under this Division, you cannot deduct the expenditure under any provision of this Act other than this Division. The expenditure cannot be taken into account in working out the amount of any deduction other than one under this Division.

(2) Subsection (1) does not, however, prevent a deduction for depreciation of property once the property is no longer used:

(3) If the property is then used for some other purpose and as a result you can deduct an amount for depreciation, then, in applying section 56 or 62 of the Income Tax Assessment Act 1936 to that deduction:

(4) For the purposes of subsection (1), an amount that would have been deductible by you under this Division apart from the operation of Subdivision 330-F (which is about excess deductions) is taken to have been deducted.

(1) This section applies if:

(2) For the purposes of this Division:

If a person (the buyer) who has *ordinary income or *statutory income from selling *petroleum obtained from *eligible mining operations he or she carries on in an area, or from selling products of such *petroleum:

the amount the buyer pays to the seller, for the purposes of this Division:

(1) If:

the original licensee is taken not to have incurred expenditure, because of the transfer or sub-lease, in respect of which an amount is deductible under this Division.

(2) Subsection (1) applies only for the purposes of this Division. It applies despite section 21 (Where consideration not in cash) of the Income Tax Assessment Act 1936.