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This Digest was available from 26 June 1996
CONTENTS
Date Introduced: 20 June 1996
House: Senate
Portfolio: Treasury
Commencement: Royal Assent
To allow certain project restructures to be eligible for the Development Allowance.
In the One Nation Statement of 26 February 1992, the then Prime Minister announced the introduction of a development allowance for approved large scale investments. The Government's announcement was implemented by the Development Allowance Authority Act 1992 (the Principal Act) and the Taxation Laws Amendment Act (No. 3) 1992. The then Government's objective in providing the allowance is to promote
The Principal Act provided for the establishment of the Development Allowance Authority (the Authority) which determines the eligibility of projects with a gross capital cost of $50 million or more for the development allowance. The development allowance provides a deduction equal to 10% of eligible plant expenditure in the first year that a plant is used or installed ready for use. In order to be eligible for the development allowance, an applicant has to meet certain qualifying criteria, including that their project involved expenditure of at least $50 million; their project was not in an industry that has an effective rate of assistance of more than 10%; and that the expenditure, or proposed expenditure, is in establishing a new productive facility, or in expanding, improving or upgrading an existing productive facility.
Since its inception, the DAA has received more than 500 applications, involving over $100 billion in capital expenditure through to the year 2002.(2) The majority of applications relate to mining projects, especially in Western Australia, with the remainder relating to projects in the manufacturing sector.(3)
On 13 July 1995, the then Treasurer announced that the Government would amend the Development Allowance Authority Act 1992 to allow bona fide project restructures to be eligible for the allowance. The then Treasurer also stated that the amendments would operate retrospectively from 1 January 1993.
This Bill is substantially the same as one introduced on 27 September 1995. That Bill lapsed with the dissolution of Parliament for the 1996 election.
The Explanatory Memorandum to the 1995 Bill states that the cost of the proposed amendments is estimated to be $10 million per annum and the total cost over the nine years from 1993-94 to 2001- 02 is expected to be about $92 million. Identical figures are given in the Explanatory Memorandum to this Bill.
Item 10 of Schedule 1 inserts new subsections 42(1A) and 42(1B) into the Development Allowance Authority Act 1992 (the Principal Act). New subsection 42(1A) provides that an entity that has sought registration of plant expenditure may apply to the Development Allowance Authority (DAA) to have that application varied in certain circumstances, including, for example, changes to the expenditure, the project or the entities carrying out the project. New subsection 42(1B) provides that new subsection 42(1A) only applies to variations due to a change in circumstances after 1 January 1993.
Item 17 of Schedule 1 repeals Part 6 of the Principal Act and inserts new Part 6, providing for the transfer of a whole or part of the benefits of an application, registration or certificate.
Proposed Part 6 sets up a system to transfer the benefit of an application, registration or certificate from the entity that had applied for the benefit to the entity that has taken over or agreed to take over, the completion of the project.
Proposed 53 sets out the criteria for granting an application. For example, the DAA must not grant an application unless it is satisfied that the taking over of the project by the transferee is for genuine commercial reasons and to enable the completion of the project.
Item 31 of Schedule 1 is a transitional provision which provides:
(1) Development Allowance Authority Bill 11992, Second Reading Speech, p. 1.
(2) Development Allowance Authority, Annual Report 1994-95, p. 5.
(3) Ibid.
Ian Ireland Ph. 06 277 2438
26 June 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.
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ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library, 1996.
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Last updated: 26 June 1996