Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Tax treatment on disposal of mining property.



Download WordDownload Word

image

 

PRESS RELEASE

 

NO. 120

 

TREASURER

 

EMBARGO: 4pm AEST, 3 December 1998

 

TAX TREATMENT ON DISPOSAL OF MINING PROPERTY

 

I am announcing today a legislative response to a recent Full Federal Court decision in Esso Australia Resources Ltd v FCT to ensure that the tax treatment on disposal of mining property continues to operate as previously applied.

 

Prior to the Full Federal Court decision on 22 July 1998, the reference to capital expenditure for the purpose of determining balancing adjustments was confined to capital expenditure which is deductible under the mining provisions.

 

The Full Federal Court’s decision will allow certain expenditure which is not deductible under the mining provisions, such as the exploration and prospecting and the allowable capital expenditure provisions, to become an allowable deduction at the time when the mining property ceases to be used for mining purposes.

 

In response to this decision the Government will legislate, with effect from this time today, to restore the tax treatment on disposal of mining property to that which applied prior to the Full Federal Court’s decision. This will apply to disposals of mining property which occur from this time today. The amendment to the law will ensure that mining taxpayers will receive deductions for the full amount of capital expenditure which is allowable under the mining provisions.

 

The general issue of ‘black hole’ or undeductible expenditures will be considered as part of Tax Reform. Until a new tax system is implemented the tax treatment of disposal of mining property will remain unchanged from what has long been understood to be the case and which applied prior to the Full Federal Court’s decision.

 

3 December 1998

CANBERRA

 

Contact: Peter Zuccato

Corporate Affairs and Marketing

Australian Taxation Office

Telephone (02) 6216 1901 or 0411 182 433 (ah)

 

 

 

 

dd