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Income Tax Assessment Amendment Act 1983 No. 14 of 1983 - SECT 54
54. After Division 10C of Part III of the Principal Act the following Division
is inserted: ''Division 10D-Deductions for Capital Expenditure on certain
Income-Producing Buildings Interpretation
''124ZF. (1) In this Division, unless the contrary intention appears-
'construct' includes make;
'eligible building' means a building in respect of which there is an amount,
or there are amounts, of qualifying expenditure;
'residential accommodation' includes short-term accommodation for travellers
and other short-term accommodation of a residential nature.
''(2) For the purposes of the application of this Division in determining the
amount of a deduction allowable under section 124ZH or 124ZK, or the amount of
the residual capital expenditure, in respect of an amount of qualifying
expenditure in respect of a building, a reference in this Division, in
relation to that amount of qualifying expenditure, to the prescribed part
shall be read as a reference to the part of the building to which that amount
of qualifying expenditure is attributable.
''(3) Subject to sub-section (4), for the purposes of the application of this
Division in determining the amount of any deduction allowable under section
124ZH or 124ZK, or the amount of the residual capital expenditure, in respect
of an amount of qualifying expenditure, a person who owned the prescribed part
or a part of the prescribed part at a particular time shall be taken to have
dealt with the prescribed part or the part of the prescribed part, as the case
may be, in the prescribed manner at that time if, at that time, the person
used the whole or a part of the prescribed part or of that part of the
prescribed part, as the case may be, for the purpose of producing assessable
income.
''(4) For the purposes of this Division, a person shall not be taken to have
used, at a particular time, property, being the whole or a part of the
prescribed part, or of a part of the prescribed part, of a building, for the
purpose of producing assessable income if, at that time, the property-
(a) was used or available for use (whether by that person or by another
person or persons) wholly or principally for, or in association with,
residential accommodation; or
(b) was used or for use (whether by that person or by another person or
persons) wholly or principally for exhibition or display in connection
with-
(i) the sale of the whole or any part of that or any other
building; or
(ii) the lease of the whole or any part of that or any other
building for use (whether by that person or by another person
or persons) wholly or principally for, or in association with,
residential accommodation.
''(5) For the purposes of this Division, where, at a particular time, the
whole or a part of a building-
(a) is for use, or is used for the provision of a facility of a kind not
commonly provided in a hotel, motel or guest house in Australia; and
(b) would, but for the operation of sub-section 124ZA (10) or (11), as the
case may be, be taken to be dealt with in the prescribed manner for
the purposes of Division 10C, it shall be taken not to be used or
available for use at that time for, or in association with,
residential accommodation.
''(6) For the purposes of this Division, where property, being the whole or a
part of a building-
(a) is, at a particular time, part of a person's home or used or for use
wholly or principally for the purpose of operating a hotel, motel or
guest house; and
(b) would, but for this sub-section, be taken not to be, at that time,
used or for use wholly or principally for, or in association with,
residential accommodation, the property shall, subject to sub-section
(5), be taken to be, at that time, used or for use wholly or
principally for, or in association with, residential accommodation.
''(7) For the purposes of this Division, an eligible building or part of an
eligible building shall not be taken not to have been used or available for
use for a particular purpose, or in a particular manner, at a particular time
if-
(a) its use for that purpose or in that manner had, at that time, ceased,
by reason only of a temporary cessation of use of the building or a
part of the building by reason of the construction of an extension,
alteration or improvement, or the making of repairs, to the building;
or
(b) it was, at that time-
(i) maintained ready for use for that purpose or in that manner;
and
(ii) not used or for use for any other purpose or in any other
manner,
and its use or intended use for that purpose or in that manner had not been
abandoned.
''(8) For the purposes of this Division, a person shall be taken to be an
eligible lessee in relation to an amount of qualifying expenditure in respect
of an eligible building at a particular time (in this sub-section referred to
as the 'relevant time') if-
(a) the person-
(i) was, at the relevant time, the lessee of the whole, or of a
part, of the part of the building to which the expenditure is
attributable;
(ii) incurred that amount of qualifying expenditure in respect of
the eligible building; and
(iii) was, at all times after the completion of the relevant
construction, and before the relevant time, the lessee of the
whole, or of a part, of the part of the building to which that
expenditure is attributable; or
(b) the person was, at the relevant time, the lessee of the whole, or of a
part, of the part of the building to which the qualifying expenditure
is attributable and obtained the lease of that part of the building,
or of a part of that part of the building, by assignment from a person
who, immediately before the assignment, was an eligible lessee in
relation to that amount of qualifying expenditure by virtue of the
application of paragraph (a) or by virtue of a previous application of
this paragraph.
''(9) References in this Division to a person shall be read as including
references to a partnership or a person in the capacity of a trustee.
''(10) For the purposes of the application of this Division in determining the
amount of a deduction allowable under section 124ZH or 124ZK in respect of an
amount of qualifying expenditure, a person who owned the whole or a part of
the prescribed part shall not be taken to have dealt with any part of the
prescribed part in the prescribed manner at any time before the date on which
the relevant construction was completed.
''(11) For the purposes of this Division, the residual capital expenditure in
relation to an amount of qualifying expenditure in respect of an eligible
building at any time (in this sub-section referred to as the 'relevant time')
is the amount (if any) ascertained by deducting from that amount of qualifying
expenditure the amount or the sum of the amounts that, in respect of the
period commencing on the day on which the prescribed part was first used by
any person for any purpose after completion of the relevant construction and
ending at the relevant time, would have been allowed, or would be allowable,
to a taxpayer as a deduction or deductions under section 124ZH if-
(a) the taxpayer were the owner of the eligible building during the whole
of that period;
(b) the taxpayer had dealt with the prescribed part in the prescribed
manner during the whole of that period; and
(c) section 124ZJ were not applicable in relation to that deduction or any
of those deductions, as the case may be.
''(12) For the purposes of the application of this Division in determining the
amount of a deduction allowable under section 124ZH or 124ZK in respect of an
amount of qualifying expenditure in respect of a building, a person who, at a
particular time (in this sub-section referred to as the 'relevant time'), is
an eligible lessee in relation to that amount of qualifying expenditure shall,
subject to sub-section (15), be taken at the relevant time to be the owner of
so much of the building as satisfies the following conditions, namely:
(a) is leased by the person at that time;
(b) is a part of the building to which the whole or a part of the amount
of qualifying expenditure is attributable; and
(c) was, at all times after the completion of the relevant construction
and before the relevant time, leased and was not, at any time after
completion of the relevant construction and before the relevant time,
leased by a person who was not an eligible lessee in relation to that
amount of qualifying expenditure.
''(13) Where, for the purposes of the application of this Division in
determining the amount of a deduction allowable under section 124ZH or 124ZK
in respect of an amount of qualifying expenditure, a person is deemed by
sub-section (12) to be the owner of a building or of a part of a building at a
particular time, no other person shall be taken to be the owner of the
building or of that part of the building, as the case may be, at that time,
for the purposes of the application of the provisions of this Division in
determining the amount of a deduction allowable under section 124ZH or 124ZK
in respect of that amount of qualifying expenditure.
''(14) In this Division, a reference, in relation to an amount of qualifying
expenditure, to the relevant construction shall be read as a reference to the
construction of the building, or of the extension, alteration or improvement,
as the case may be, to which the amount of qualifying expenditure is
attributable.
''(15) Where-
(a) during the whole or a part of a year of income (which whole or part,
as the case may be, is in this sub-section referred to as the
'relevant period') a taxpayer was the owner of a particular part (in
this sub-section referred to as the 'relevant part') of the prescribed
part in relation to an amount of qualifying expenditure; and
(b) during a part only of the relevant period the taxpayer was also the
owner of another part of that prescribed part, then, for the purposes
of the application of this Division in relation to the taxpayer in
relation to the relevant part (other than an application of this
Division in relation to the whole of the prescribed part or in
relation to a part of the prescribed part of which the relevant part
is only a part), the taxpayer shall not be taken to have been the
owner of the relevant part at any time during the part of the relevant
period referred to in paragraph (b). Qualifying expenditure
''124ZG. (1) Subject to this section, where-
(a) a person has incurred expenditure of a capital nature in respect of
the construction of a building in Australia or in respect of the
construction of an extension, alteration or improvement to a building
in Australia;
(b) at the time when that expenditure was incurred-
(i) the building or the extension, alteration or improvement, as
the case may be, was to be owned or leased by that person; or
(ii) a part only of the building or of the extension, alteration or
improvement, as the case may be, was to be owned or leased by
that person;
(c) the building or the extension, alteration or improvement, as the case
may be, commenced to be constructed after 19 July 1982 and
construction of the building or of that extension, alteration or
improvement, as the case may be, has been completed; and
(d) at the time of completion of construction of the building, or of the
extension, alteration or improvement, as the case may be-
(i) in a case to which sub-paragraph (b) (i) applies-
(A) the building, or the extension, alteration or
improvement, as the case may be, was for use by that
person for the purpose of producing income or was for
disposal by that person to another person for use by that
other person for the purpose of producing income; or
(B) a part (in this sub-sub-paragraph referred to as the
'relevant part') of the building, or of the extension,
alteration or improvement, as the case may be, was for
use or disposal by that person as described in
sub-sub-paragraph (A); or
(ii) in a case to which sub-paragraph (b) (ii) applies-
(A) the whole (in this sub-sub-paragraph referred to as the
'relevant part') of the part of the building, extension,
alteration or improvement, as the case may be, to which
that sub-paragraph applies was for use or disposal by
that person as described in sub-sub-paragraph (i) (A); or
(B) a part (in this sub-sub-paragraph referred to as the
'relevant part') of the part of the building, extension,
alteration or improvement, as the case may be, to which
that sub-paragraph applies was for use or disposal by
that person as described in sub-sub-paragraph (i) (A),
then, for the purposes of this Division-
(e) in a case to which sub-sub-paragraph (d) (i) (A) applies-the amount of
the capital expenditure referred to in paragraph (a) shall be taken to
be an amount of qualifying expenditure in respect of the building; and
(f) in a case to which sub-sub-paragraph (d) (i) (B), (ii) (A) or (ii) (B)
applies-so much of the amount of the capital expenditure referred to
in paragraph (a) as is attributable to the relevant part referred to
in whichever of those sub-sub-paragraphs is applicable shall be taken
to be an amount of qualifying expenditure in respect of the building.
''(2) For the purposes of paragraph (1) (d)-
(a) a building, or an extension, alteration or improvement to a building;
or
(b) any part of a building, or of an extension, alteration or improvement
to a building, shall not be taken to be for use by a person for the
purpose of producing income if the building, extension, alteration or
improvement, or the part of the building, extension, alteration or
improvement, as the case may be, was for use (whether by that person
or by another person or persons) wholly or principally-
(c) for, or in association with, residential accommodation; or
(d) for exhibition or display in connection with-
(i) the sale of the whole or any part of that or any other
building; or
(ii) the lease of the whole or any part of that or any other
building for use (whether by that person or by another person
or persons) wholly or principally for, or in association with,
residential accommodation.
''(3) References in sub-section (1) to expenditure of a capital nature
incurred in respect of the construction of a building or of an extension,
alteration or improvement to a building shall be read as not including
references to expenditure in respect of any property in respect of which
depreciation is allowable, or would be allowable if the property were for use
for the purpose of producing assessable income, under section 54 or 57AE or
expenditure in respect of which a deduction is allowable, or would be
allowable if the property were for use for the purpose of producing assessable
income, under section 73A, 75B or 124JA or Division 10, 10AAA or 10AA.
''(4) Where there is an amount of qualifying expenditure in respect of a
building or part of a building (which building or part of a building is in
this sub-section referred to as the 'relevant building'), no part of that
amount, or of any amount incurred by a person in acquiring any part of the
relevant building to which that amount of qualifying expenditure is
attributable, shall be an allowable deduction, or be taken into account in
ascertaining the amount of an allowable deduction, from the assessable income
of any person of any year of income under a provision of this Act other than
this Division. Deductions in respect of qualifying expenditure
''124ZH. (1) Subject to this section and section 124ZJ, where-
(a) there is an amount of qualifying expenditure in respect of a building;
and
(b) during the whole of a year of income, a taxpayer-
(i) was the owner of the prescribed part and dealt with the
prescribed part in the prescribed manner; or
(ii) was the owner of a part of the prescribed part and dealt with
that part of the prescribed part in the prescribed manner, the
taxpayer is entitled to a deduction, in his assessment in
respect of income of that year of income, of an amount equal
to-
(c) in a case to which sub-paragraph (b) (i) applies-21/2% of the amount
of qualifying expenditure; and
(d) in a case to which sub-paragraph (b) (ii) applies-so much of the
amount calculated in accordance with paragraph (c) as the Commissioner
determines, having regard to the extent to which the amount of
qualifying expenditure is attributable to the part of the prescribed
part referred to in that sub-paragraph.
''(2) Subject to this section and section 124ZJ, where-
(a) there is an amount of qualifying expenditure in respect of a building;
and
(b) during a part only of a year of income, a taxpayer-
(i) was the owner of the prescribed part and dealt with the
prescribed part in the prescribed manner; or
(ii) was the owner of a part of the prescribed part and dealt with
that part of the prescribed part in the prescribed manner, the
taxpayer is entitled to a deduction, in his assessment in
respect of income of that year of income, of an amount equal
to-
(c) in a case to which sub-paragraph (b) (i) applies-21/2% of so much of
that amount of qualifying expenditure as bears to that amount the same
proportion as the number of whole days in that part of the year of
income bears to the number of days in the year of income; and
(d) in a case to which sub-paragraph (b) (ii) applies-so much of the
amount calculated in accordance with paragraph (c) as the Commissioner
determines, having regard to the extent to which the amount of
qualifying expenditure is attributable to the part of the prescribed
part referred to in that sub-paragraph.
''(3) For the purposes of determining the amount of a deduction allowable to a
taxpayer under this section in respect of an amount of qualifying expenditure
in respect of an eligible building, the taxpayer shall be taken not to have
dealt with any part of the prescribed part in the prescribed manner at any
time after the expiration of the period of 40 years commencing on the day on
which the prescribed part was first used by any person for any purpose after
completion of the relevant construction. Reduction of deductions
''124ZJ. (1) Where-
(a) apart from this sub-section, a deduction would be allowable to a
taxpayer under section 124ZH in respect of an amount of qualifying
expenditure in relation to the use of the prescribed part or a part
(in this sub-section referred to as the 'relevant part') of the
prescribed part during a year of income or a part of a year of income;
and
(b) during the whole or a part of the year of income, or of that part of
the year of income, as the case may be-
(i) any part of the prescribed part or of the relevant part, as the
case may be, was not used for the purpose of producing
assessable income; or
(ii) the prescribed part or the relevant part, as the case may be,
was used by the taxpayer only partly for the purpose of
producing assessable income, the amount of the deduction shall
be reduced by such amount as the Commissioner considers fair
and reasonable.
''(2) Where-
(a) by reason of the destruction of an eligible building or a part of an
eligible building, a deduction (in this sub-section referred to as the
'relevant deduction') is allowable in respect of the whole or a part
of the residual capital expenditure in relation to an amount of
qualifying expenditure in respect of the eligible building; and
(b) in respect of any part of the period commencing on the day on which
the prescribed part was first used by any person for any purpose after
completion of the relevant construction and ending immediately before
the time of destruction-
(i) a deduction has not been allowed and is not allowable under
section 124ZH to any person in respect of that amount of
qualifying expenditure; or
(ii) a deduction that has been allowed or is allowable under section
124ZH to any person in respect of that amount of qualifying
expenditure has been reduced, or is liable to be reduced, by
virtue of the application of sub-section (1) of this section,
the relevant deduction shall be reduced by such amount as the
Commissioner considers fair and reasonable. Deduction in
respect of destruction of building
''124ZK. (1) Subject to this section and section 124ZJ, where-
(a) there is an amount of qualifying expenditure in respect of a building;
(b) during a year of income, the prescribed part is destroyed;
(c) immediately before the destruction, a taxpayer owned the prescribed
part or a part (in this sub-section referred to as the 'relevant
part') of the prescribed part;
(d) at any time before the destruction, the taxpayer dealt with the
prescribed part or the relevant part, as the case may be, in the
prescribed manner;
(e) if the taxpayer did not deal with the prescribed part or the relevant
part, as the case may be, in the prescribed manner immediately before
the time of the destruction, no part of the prescribed part or of the
relevant part, as the case may be, that, at the time (in this
paragraph referred to as the 'relevant time') when the prescribed part
or the relevant part, as the case may be, was last dealt with in the
prescribed manner, was used for the purpose of producing assessable
income was used by any person for any purpose after the relevant time
and before the time of the destruction;
(f) in a case where the taxpayer owned the whole of the prescribed part
immediately before the time of the destruction, the residual capital
expenditure at that time in relation to the amount of qualifying
expenditure exceeds the amount (if any) received or receivable by the
taxpayer (under a policy of insurance or otherwise) in respect of the
destruction of the prescribed part; and
(g) in a case where the taxpayer owned a part only of the prescribed part
immediately before the time of the destruction, so much of the
residual capital expenditure at that time in relation to the amount of
qualifying expenditure as is attributable to the relevant part exceeds
the amount (if any) received or receivable by the taxpayer (under a
policy of insurance or otherwise) in respect of the destruction of the
relevant part, the taxpayer is entitled, in his assessment in respect
of income of the year of income, to a deduction of an amount equal to-
(h) in a case to which paragraph (f) applies-the excess referred to in
that paragraph; and
(j) in a case to which paragraph (g) applies-the excess referred to in
that paragraph.
''(2) Subject to this section and section 124ZJ, where-
(a) there is an amount of qualifying expenditure in respect of a building;
(b) during a year of income, a part (in this sub-section referred to as
the 'destroyed part') of the prescribed part is destroyed;
(c) immediately before the destruction, a taxpayer owned the destroyed
part or a part (in this sub-section referred to as the 'relevant
part') of the destroyed part;
(d) at any time before the destruction, the taxpayer dealt with the
destroyed part or the relevant part, as the case may be, in the
prescribed manner;
(e) if the taxpayer did not deal with the destroyed part or the relevant
part, as the case may be, in the prescribed manner immediately before
the time of the destruction, no part of the destroyed part or of the
relevant part, as the case may be, that, at the time (in this
paragraph referred to as the 'relevant time') when the destroyed part
or the relevant part, as the case may be, was last dealt with in the
prescribed manner, was used for the purpose of producing assessable
income was used by any person for any purpose after the relevant time
and before the time of the destruction;
(f) in a case where the taxpayer owned the whole of the destroyed part
immediately before the time of the destruction, so much of the
residual capital expenditure at that time in relation to the amount of
qualifying expenditure as is attributable to the destroyed part
exceeds the amount (if any) received or receivable by the taxpayer
(under a policy of insurance or otherwise) in respect of the
destruction of the destroyed part; and
(g) in a case where the taxpayer owned a part only of the destroyed part
immediately before the time of the destruction, so much of the
residual capital expenditure at that time in relation to the amount of
qualifying expenditure as is attributable to the relevant part exceeds
the amount (if any) received or receivable by the taxpayer (under a
policy of insurance or otherwise) in respect of the destruction of the
relevant part, the taxpayer is entitled, in his assessment in respect
of income of the year of income, to a deduction of an amount equal to-
(h) in a case to which paragraph (f) applies-the excess referred to in
that paragraph; and
(j) in a case to which paragraph (g) applies-the excess referred to in
that paragraph.
''(3) Where-
(a) a building or a part of a building is destroyed; and
(b) an amount is received or receivable by a person who, immediately
before the time of the destruction, owned the whole or a part of the
building in respect of the disposal of any property (in this
sub-section referred to as the 'relevant property') that, immediately
before the destruction, formed part of the building or of that part of
the building, as the case may be, that was destroyed, the amount so
received or receivable, reduced by any demolition costs incurred in
respect of the relevant property, shall be taken to be an amount
received or receivable by the person in respect of the destruction of
the property of which the relevant property so formed part.
''(4) Where-
(a) an amount is received or receivable by a person under a policy of
insurance or otherwise in respect of the destruction of property; and
(b) it is required to be determined for the purposes of this Division how
much of the amount received or receivable was received or is
receivable in respect of part of the property referred to in paragraph
(a), so much of the amount referred to in paragraph (a) as, in the
opinion of the Commissioner, relates to the part of the property
referred to in paragraph (b) shall be taken to have been received or
to be receivable, as the case may be, by the person in respect of the
part of the property referred to in paragraph (b).''.
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