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Monday, 22 October 1973
Page: 2471

Mr Giles asked the Treasurer, upon notice:

(1)   With reference to the many areas in Australia, such as the Mallee area in the Electoral Division of Angas, which are prone to drought and stock losses, did the previous Government introduce a special depreciation allowance for water conservation and stock water of 100 per cent of the cost of the project in the year in which it occurred.

(2)   If so, what depreciation allowance will be available under the program of the present Government.

Mr Crean - The answer to the honourable member's question is as follows:

(1)   A special income tax deduction for the capital cost of constructing dams, earth tanks, underground tanks, irrigation channels or similar improvements, or the sinking of bores or wells, for the purpose of conserving or conveying water for use in primary production, was introduced by the Chifley Government in 1947. The concession was extended in 1961 to include expenditure on pipes placed underground to convey water for primary production purposes and. in 1969, to include the cost of concrete tanks and tank stands.

(2)   The relevant Budget proposal will alter the timing of the income tax dedications for capital expenditure of these kinds that are made after 21 August 1973, otherwise than under a contract entered into before that day. Generally, capital expenditure on improvements used for the conserv ing of water will be deductible to a primary producer over 10 years in equal annual instalments. However, the cost of structural improvements used for the storage of water, e.g., concrete tanks, will be allowed in the form of general depreciation deductions over the estimated effective life of the item. The timing of income tax deductions for capital expenditure incurred under a contract made before 22 August 1973 or for ordinary recurring business expenditure that is not of a capital nature will not be affected by the Budget proposal. These outgoing will continue to be deductible in full in the year in which they are incurred.

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