Commonwealth Numbered Acts

INCOME TAX ASSESSMENT AMENDMENT ACT (NO. 2) 1980 No. 57 of 1980 - SECT 7

7. After section 53G the following section is inserted: Deduction for cost of
converting oil-fired plant

"53H. (1) Conversion costs incurred by a taxpayer on or after 22 August 1979
and before 1 July 1984 shall, subject to this section, be an allowable
deduction in respect of the year of income in which the conversion costs were
incurred.



"(2) A deduction is not allowable to a taxpayer under this section in respect
of conversion costs incurred by the taxpayer in respect of a unit of property
unless-

   (a)  in a case where the conversion costs were incurred otherwise than as
        is mentioned in paragraph (b)-

        (i)    the property was in use by the taxpayer in the prescribed
               manner as at 21 August 1979;

        (ii)   the property was installed ready for use as at 21 August 1979
               for the purpose of being used by the taxpayer in the prescribed
               manner; or

        (iii)  in a case to which neither sub-paragraph (i) nor (ii) applies,
               the property-

                (A)  was acquired by the taxpayer under a contract entered
                     into on or before 21 August 1979; or

                (B)  was constructed by the taxpayer, construction having
                     commenced on or before that date, and the property was
                     acquired by the taxpayer, or constructed by the taxpayer,
                     as the case may be, for the purpose of being used by the
                     taxpayer in the prescribed manner; or

   (b)  in the case where the conversion costs were incurred in respect of
        converting or adapting a unit of property that, before the conversion
        or adaptation, was an LPG unit or was for use principally and directly
        in connection with the operation of an LPG unit-

        (i)    the property was in use by the taxpayer in the prescribed
               manner as at 8 April 1980;

        (ii)   the property was installed ready for use as at 8 April 1980 for
               the purpose of being used by the taxpayer in the prescribed
               manner; or

        (iii)  in a case to which neither sub-paragraph (i) nor (ii) applies,
               the property-

                (A)  was acquired by the taxpayer under a contract entered
                     into on or before 8 April 1980; or

                (B)  was constructed by the taxpayer, construction having
                     commenced on or before that date, and the property was
                     acquired by the taxpayer, or constructed by the taxpayer,
                     as the case may be, for the purpose of being used by the
                     taxpayer in the prescribed manner.



"(3) A reference in sub-section (2) to the use of property by a taxpayer in
the prescribed manner shall be read as a reference to-

   (a)  in the case of any taxpayer-the use of the property by the taxpayer
        wholly and exclusively-

        (i)    in Australia; and

        (ii)   for the purpose of producing assessable income otherwise than
               by-

                (A)  the leasing of the property;

                (B)  the letting of the property on hire under a hire-purchase
                     agreement; or

                (C)  the granting to other persons of rights to use the
                     property; or

   (b)  in the case of a taxpayer being a leasing company-the use of the
        property, wholly and exclusively-

        (i)    in Australia; and

        (ii)   for the purpose of producing assessable income, by another
               person to whom the taxpayer has leased the property under a
               long-term lease agreement that was entered into by the taxpayer
               in the course of carrying on a business in Australia and was so
               entered into by the taxpayer and the other person at arm's
               length.



"(4) Subject to sub-section (27), no part of any conversion costs incurred by
a taxpayer shall be an allowable deduction, or be taken into account in
ascertaining the amount of an allowable deduction, under a provision of this
Act other than this section in an assessment of the taxpayer in respect of
income of any year of income.



"(5) For the purposes of this Act, but subject to sub-section (27), conversion
costs shall be deemed not to be capital expenditure and not to be expenditure
of a capital nature.



"(6) This section does not apply, and shall be deemed never to have applied,
in relation to conversion costs incurred by a taxpayer in respect of property
owned by the taxpayer, not being property that, in the case of a taxpayer
being a leasing company, the taxpayer has leased to another person, if, before
the expiration of 12 months after the converted property was first used, or
installed ready for use, by the taxpayer-

   (a)  the taxpayer disposed of the property or the property was lost or
        destroyed;

   (b)  the taxpayer leased the property, let the property on hire under a
        hirepurchase agreement or otherwise granted a right to another person
        to use the property; or

   (c)  the taxpayer used the property outside Australia or for a purpose
        other than the purpose of producing assessable income.



"(7) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        of a year of income in relation to conversion costs incurred by the
        taxpayer in respect of property, not being property that, in the case
        of a taxpayer being a leasing company, the taxpayer has leased to
        another person; and

   (b)  before the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the taxpayer, the taxpayer
        disposed of a part of his interest in the property, so much of the
        deduction as the Commissioner considers appropriate shall be deemed
        not to have been, or not to be, allowable, as the case may be.



"(8) This section does not apply, and shall be deemed never to have applied,
in relation to conversion costs incurred by a leasing company in respect of
property leased by the leasing company to another person (in this sub-section
referred to as the 'lessee') if, before the expiration of 12 months after the
converted property was first used, or installed ready for use, by the lessee
and before the expiration of the term of the lease-

   (a)  the property was disposed of by the leasing company to a person other
        than the lessee or was lost or destroyed;

   (b)  the lessee used the property outside Australia or for a purpose other
        than the purpose of producing assessable income;

   (c)  the lease was terminated otherwise than by the acquisition of the
        property by the lessee;

   (d)  while the lease was in force the lessee entered into a contract or
        arrangement with another person for the use of the property by that
        other person;

   (e)  the lessee acquired the property and disposed of it; or

   (f)  the lessee acquired the property and entered into a contract or
        arrange- ment with another person for the use of the property by that
        other person.



"(9) This section does not apply and shall be deemed never to have applied in
relation to conversion costs incurred by a taxpayer in respect of property
leased by the taxpayer to another person (in this sub-section referred to as
the 'lessee') if, before the property was leased to the lessee by the
taxpayer, the lessee entered into a contract or arrangement with another
person for the use of the property by that other person.



"(10) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        of a year of income in relation to conversion costs incurred by the
        taxpayer in respect of property, not being property that, in the case
        of a taxpayer being a leasing company, the taxpayer has leased to
        another person;

   (b)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the taxpayer-

        (i)    the taxpayer disposed of the property;

        (ii)   the taxpayer leased the property, let the property on hire
               under a hire-purchase agreement or otherwise granted a right to
               another person to use the property; or

        (iii)  the taxpayer used the property outside Australia or for a
               purpose other than the purpose of producing assessable income;
               and

   (c)  the Commissioner is satisfied that, at the time when the converted
        property was first used, or installed ready for use, by the taxpayer,
        the taxpayer intended to dispose of the property, to lease the
        property, let the property on hire under a hire-purchase agreement or
        otherwise grant a right to another person to use the property, or to
        use the property as mentioned in sub-paragraph (iii) of paragraph (b),
        after becoming entitled to a deduction under this section in relation
        to the conversion costs, the deduction shall, if the Commissioner so
        determines, be deemed not to have been, or not to be, allowable, as
        the case may be.



"(11) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        of a year of income in relation to conversion costs incurred by the
        taxpayer in respect of property, not being property that, in the case
        of a taxpayer being a leasing company, the taxpayer has leased to
        another person;

   (b)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the taxpayer, the taxpayer
        disposed of a part of his interest in the property; and

   (c)  the Commissioner is satisfied that, at the time when the converted
        property was first used, or installed ready for use, by the taxpayer,
        the taxpayer intended to dispose of the whole or a part of his
        interest in the property after becoming entitled to a deduction under
        this section in relation to the conversion costs, then, if the
        Commissioner so determines, so much of the deduction as the
        Commissioner considers appropriate shall be deemed not to have been,
        or not to be, allowable, as the case may be.



"(12) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        being a leasing company of a year of income in relation to conversion
        costs incurred by the taxpayer in respect of property leased by the
        taxpayer to another person (in this sub-section referred to as the
        'lessee');

   (b)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the lessee and before the
        expiration of the term of the lease-

        (i)    the taxpayer disposed of the property to a person other than
               the lessee;

        (ii)   the lessee used the property outside Australia or for a purpose
               other than the purpose of producing assessable income;

        (iii)  the lease was terminated otherwise than by the acquisition of
               the property by the lessee;

        (iv)   while the lease was in force the lessee entered into a contract
               or arrangement with another person for the use of the property
               by that other person;

        (v)    the lessee acquired the property and disposed of it; or

        (vi)   the lessee acquired the property and entered into a contract or
               arrangement with another person for the use of the property by
               that other person; and

   (c)  the Commissioner is satisfied that, at the time when the converted
        property was first used, or installed ready for use, by the lessee-

        (i)    in a case to which sub-paragraph (i) of paragraph (b) applies-
               the taxpayer intended to dispose of the property to a person
               other than the lessee before the expiration of the term of the
               lease; or

        (ii)   in a case to which sub-paragraph (ii), (iii), (iv), (v) or (vi)
               of paragraph (b) applies-the lessee intended to use the
               property as mentioned in sub-paragraph (ii) of that paragraph,
               to cause the lease to be terminated as mentioned in
               sub-paragraph (iii) of that paragraph, to enter into a contract
               or arrangement as mentioned in sub-paragraph (iv) of that
               paragraph, to acquire and dispose of the property or to acquire
               the property and enter into a contract or arrangement as
               mentioned in sub- paragraph (vi) of that paragraph, the
               deduction shall, if the Commissioner so determines, be deemed
               not to have been, or not to be, allowable, as the case may be.



"(13) For the purposes of sub-sections (6), (8), (10) and (12), if a taxpayer
who took property on hire under a hire-purchase agreement does or omits to do
any act or thing that results in the person (in this sub-section referred to
as the 'owner') from whom the taxpayer took the property on hire under that
agreement obtaining possession of the property-

   (a)  the taxpayer shall be deemed to have disposed of the property; and

   (b)  the disposal shall be deemed to have taken place at the time when
        possession of the property was so obtained by the owner.



"(14) Where-

   (a)  the individual interest of a taxpayer in the net income of a
        partnership has been or is to be included in the assessable income of
        the taxpayer of a year of income (in this sub-section and in
        sub-section (16) in its application in relation to this sub-section
        referred to as the 'relevant year of income'), or the individual
        interest of a taxpayer in a partnership loss has been allowed or is
        allowable as a deduction from the assessable income of the taxpayer of
        a year of income (in this sub- section and in sub-section (16) in its
        application in relation to this sub-section also referred to as the
        'relevant year of income');

   (b)  a deduction (in this sub-section and in sub-section (16) in its
        application in relation to this sub-section referred to as the
        'relevant deduction') under this section in relation to conversion
        costs incurred by the partnership in respect of a unit of property was
        taken into account in calculating the net income of the partnership,
        or the partnership loss, as the case may be; and

   (c)  before the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the partnership, the
        taxpayer disposed of the whole or a part of his interest in the
        partnership or in the property, there shall be included in the
        assessable income of the taxpayer of the relevant year of income-

   (d)  where the taxpayer disposed of the whole of his interest in the
        partner- ship or in the property-the prescribed amount; or

   (e)  in any other case-so much of the prescribed amount as the Commissioner
        considers appropriate.



"(15) Where-

   (a)  the individual interest of a taxpayer in the net income of a
        partnership has been or is to be included in the assessable income of
        the tax- payer of a year of income (in this sub-section and in
        sub-section (16) in its application in relation to this sub-section
        referred to as the 'relevant year of income'), or the individual
        interest of a taxpayer in a partnership loss has been allowed or is
        allowable as a deduction from the assessable income of the taxpayer of
        a year of income (in this sub- section and in sub-section (16) in its
        application in relation to this sub-section also referred to as the
        'relevant year of income');

   (b)  a deduction (in this sub-section and in sub-section (16) in its
        application in relation to this sub-section referred to as the
        'relevant deduction') under this section in relation to conversion
        costs incurred by the partnership in respect of a unit of property was
        taken into account in calculating the net income of the partnership,
        or the partnership loss, as the case may be; and

   (c)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the partnership, the
        taxpayer disposed of the whole or a part of his interest in the
        partnership or in the property, and the Commissioner is satisfied
        that, at the time when the converted property was first used, or
        installed ready for use, by the partnership, the taxpayer intended to
        dispose of the whole or a part of his interest in the partnership or
        in the property after the partnership became entitled to a deduction
        under this section, there shall, if the Commissioner so determines, be
        included in the assessable income of the taxpayer of the relevant year
        of income-

   (d)  where the taxpayer disposed of the whole of his interest in the
        partner- ship or in the property-the prescribed amount; or

   (e)  in any other case-so much of the prescribed amount as the Commissioner
        considers appropriate.



"(16) For the purposes of sub-sections (14) and (15), the prescribed amount
is-

   (a)  where the relevant deduction related to conversion costs incurred by
        the partnership in respect of the relevant property and the partners
        have agreed as to the amount of those conversion costs to be borne by
        the taxpayer-an amount that bears to the amount of the relevant
        deduction the same proportion as so much of the amount of those
        conversion costs as the partners agreed was to be borne by the
        taxpayer bears to the amount of those conversion costs; or

   (b)  in any other case-an amount that bears to the amount of the relevant
        deduction the same proportion as the individual interest of the
        taxpayer in the net income of the partnership of the year of income of
        the partnership that corresponds to the relevant year of income bears
        to that net income or, as the case requires, as the individual
        interest of the taxpayer in the partnership loss for the corresponding
        year of income of the partnership bears to that partnership loss.



"(17) In calculating the net income of a partnership, or a partnership loss,
in accordance with section 90, regard shall not be had to the provisions of
this section in so far as they apply to conversion costs incurred by the
partnership in respect of property that is leased by the partnership to
another person, but, where a partnership in which any one or more of the
partners is a leasing company has incurred such conversion costs, then, for
the purposes of the application of this section in respect of such a partner,
that partner shall be deemed to have incurred-

   (a)  so much of the amount of those conversion costs as the partners have
        agreed is to be borne by that partner; or

   (b)  if the partners have not agreed as to the part of that amount that is
        to be borne by that partner-so much of that amount as bears to that
        amount the same proportion as the individual interest of the partner
        in the net income of the partnership of the year of income in which
        the conversion costs were incurred bears to that net income or, as the
        case requires, as the individual interest of the partner in the
        partnership loss for that year of income bears to that partnership
        loss.



"(18) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        being a leasing company in relation to conversion costs incurred by a
        partnership in which the taxpayer is a partner in respect of property
        that is leased by the partnership to another person (in
        this sub-section referred to as the 'lessee'); and

   (b)  before the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the lessee and before the
        expiration of the term of the lease, the taxpayer disposed of the
        whole or a part of his interest in the partnership or in the property
        otherwise than to the lessee, then-

   (c)  where the taxpayer disposed of the whole of his interest in the
        partnership or in the property-the deduction shall be deemed not to
        have been, or not to be, allowable, as the case may be; or

   (d)  in any other case-so much of the deduction as the Commissioner
        considers appropriate shall be deemed not to have been, or not to be,
        allowable, as the case may be.



"(19) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        being a leasing company in relation to conversion costs incurred by a
        partnership in which the taxpayer is a partner in respect of property
        that is leased by the partnership to another person (in
        this sub-section referred to as the 'lessee');

   (b)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the lessee and before the
        expiration of the term of the lease, the taxpayer disposed of the
        whole or a part of his interest in the partnership or in the property
        otherwise than to the lessee; and

   (c)  the Commissioner is satisfied that, at the time when the converted
        property was first used, or installed ready for use, by the lessee,
        the taxpayer intended to dispose of the whole or a part of his
        interest in the partnership or in the property after becoming entitled
        to a deduction under this section in relation to the conversion costs,
        then, if the Commissioner so determines-

   (d)  where the taxpayer disposed of the whole of his interest in the
        partnership or in the property-the deduction shall be deemed not to
        have been, or not to be, allowable, as the case may be; or

   (e)  in any other case-so much of the deduction as the Commissioner
        considers appropriate shall be deemed not to have been, or not to be,
        allowable, as the case may be.



"(20) This section does not apply, and shall be deemed never to have applied,
in relation to conversion costs incurred by a partnership in respect of
property leased by the partnership to another person (in this sub-section
referred to as the 'lessee') if, before the expiration of 12 months after the
con- verted property was first used, or installed ready for use, by the lessee
and before the expiration of the term of the lease-

   (a)  the property was disposed of by the partnership to a person other than
        the lessee or was lost or destroyed;

   (b)  the lessee used the property outside Australia or for a purpose other
        than the purpose of producing assessable income;

   (c)  the lease was terminated otherwise than by the acquisition of the
        property by the lessee;

   (d)  while the lease was in force the lessee entered into a contract or
        arrangement with another person for the use of the property by that
        other person;

   (e)  the lessee acquired the property and disposed of it; or

   (f)  the lessee acquired the property and entered into a contract or
        arrangement with another person for the use of the property by that
        other person.



"(21) This section does not apply, and shall be deemed never to have ap-
plied, in relation to conversion costs incurred by a partnership in respect of
property leased by the partnership to another person (in this sub-section
referred to as the 'lessee') if, before the property was leased to the lessee
by the partnership, the lessee entered into a contract or arrangement with
another person for the use of the property by that other person.



"(22) Where-

   (a)  a deduction has been allowed, or would but for this sub-section be
        allowable, under this section from the assessable income of a taxpayer
        being a leasing company in relation to conversion costs incurred by a
        partnership in which the taxpayer is a partner in respect of property
        that is leased by the partnership to another person (in
        this sub-section referred to as the 'lessee');

   (b)  after the expiration of 12 months after the converted property was
        first used, or installed ready for use, by the lessee and before the
        expiration of the term of the lease-

        (i)    the property was disposed of by the partnership to a person
               other than the lessee;

        (ii)   the lessee used the property outside Australia or for a purpose
               other than the purpose of producing assessable income;

        (iii)  the lease was terminated otherwise than by the acquisition of
               the property by the lessee;

        (iv)   while the lease was in force the lessee entered into a contract
               or arrangement with another person for the use of the property
               by that other person;

        (v)    the lessee acquired the property and disposed of it; or

        (vi)   the lessee acquired the property and entered into a contract or
               arrangement with another person for the use of the property by
               that other person; and

   (c)  the Commissioner is satisfied that, at the time when the converted
        property was first used, or installed ready for use, by the lessee-

        (i)    in a case to which sub-paragraph (i) of paragraph (b) applies-
               the partnership intended to dispose of the property to a person
               other than the lessee before the expiration of the term of the
               lease; or

        (ii)   in a case to which sub-paragraph (ii), (iii), (iv), (v) or (vi)
               of paragraph (b) applies-the lessee intended to use the
               property as mentioned in sub-paragraph (ii) of that paragraph,
               to cause the lease to be terminated as mentioned in
               sub-paragraph (iii) of that paragraph, to enter into a contract
               or arrangement as mentioned in sub-paragraph (iv) of that
               paragraph, to acquire and dispose of the property or to acquire
               the property and to enter into a contract or arrangement as
               mentioned in sub- paragraph (vi) of that paragraph, the
               deduction shall, if the Commissioner so determines, be deemed
               not to have been, or not to be, allowable, as the case may be.



"(23) Paragraph (a) of sub-section (6) does not apply in relation to a
disposal of property by a taxpayer being a company, being a disposal occur-
ring before the expiration of the period of 12 months after the date on which
the converted property was first used, or installed ready for use, by the
taxpayer, if-

   (a)  the disposal by the taxpayer was to another company (in
        this sub-section referred to as the 'transferee') that was, at the
        time of the disposal, related to the taxpayer;

   (b)  the property was not, at any time (in this paragraph referred to as
        the 'relevant time') during that period of 12 months, owned by a
        person other than-

        (i)    in a case where the transferee was the holding company of the
               taxpayer-the transferee or a company related to the transferee
               at the relevant time;

        (ii)   in a case where the transferee was a wholly-owned subsidiary of
               the taxpayer-the taxpayer or a company related to the taxpayer
               at the relevant time;

        (iii)  in a case where the transferee was a wholly-owned subsidiary of
               another company (in this sub-paragraph referred to as the
               'holding company') of which the taxpayer was also a wholly-
               owned subsidiary-the holding company or a company related to
               the holding company at the relevant time; or

        (iv)   in a case where the transferee was a wholly-owned subsidiary of
               other companies (in this sub-paragraph referred to as the
               'parent companies') of which the taxpayer was also a wholly-
               owned subsidiary-a company that, at the relevant time, was a
               wholly-owned subsidiary of the parent companies;

   (c)  at any time during that period of 12 months when the property was
        owned by-

        (i)    in a case where the transferee was the holding company of the
               taxpayer-the transferee;

        (ii)   in a case where the transferee was a wholly-owned subsidiary of
               the taxpayer-the taxpayer; or

        (iii)  in a case where the transferee was a wholly-owned subsidiary of
               another company of which the taxpayer was also a wholly- owned
               subsidiary-that other company, the transferee, the taxpayer, or
               that other company, as the case may be, was an eligible public
               company in relation to the year of income in which that time
               occurred; and

   (d)  at no time during that period of 12 months did a person who owned the
        property-

        (i)    lease the property, let the property on hire under a
               hire-purchase agreement or otherwise grant a right to another
               person to use the property; or

        (ii)   use the property outside Australia or for a purpose other than
               the purpose of producing assessable income.



"(24) Sub-sections (2) to (8) of section 82AJA apply for the purposes of
sub-section (23) of this section in like manner as those sub-sections apply
for the purposes of sub-section (1) of section 82AJA.



"(25) Where a deduction has been allowed, or would but for this sub- section
be allowable, under this section from the assessable income of a taxpayer in
relation to conversion costs incurred by the taxpayer in respect of a unit of
property (in this sub-section referred to as the 'converted unit') and, before
1 July 1984-

   (a)  a petroleum unit was acquired or constructed, or taken on lease, by
        the taxpayer as a replacement or substitute for the converted unit; or

   (b)  the converted unit was converted or adapted for use as a petroleum
        unit, the deduction shall be deemed not to have been, or not to be,
        allowable, as the case may be.



"(26) For the purposes of the application of sub-section (25), 'petroleum
unit' means a unit of property, not being mobile property, that requires
energy for the performance of the function, or some or all of the functions,
for which it was designed, and is designed to obtain that energy directly, and
solely or principally, from the combustion of-

   (a)  in a case where the converted property referred to in sub-section (25)
        was, after the relevant conversion or adaptation, an LPG unit-
        petroleum or a product obtained by refining petroleum, not being
        petroleum of a kind, or such a product of a kind, that is in a gaseous
        state at a temperature of 15 degrees Celsius and a pressure of 1
        atmosphere; and

   (b)  in any other case-petroleum or a product obtained by refining
        petroleum, not being-

        (i)    petroleum of a kind of which not less than 80% by volume is
               methane; or

        (ii)   a product derived from petroleum of the kind referred to in
               sub-paragraph (i);



"(27) Where, by reason of the operation of any of the preceding provisions of
this section-

   (a)  a deduction, or part of a deduction, in relation to conversion costs
        is deemed not to have been, or not to be, allowable; or

   (b)  this section does not apply and is deemed never to have applied in
        respect of conversion costs incurred by a taxpayer, sub-sections (4)
        and (5) do not apply in relation to-

   (c)  in a case where a part only of the deduction in relation to the
        conversion costs is deemed not to have been, or not to be,
        allowable-so much of the conversion costs as is equal to that part;
        and

   (d)  in any other case-the conversion costs.



"(28) Where property that is owned or has been taken on lease by a taxpayer
being a private company is used at any time for private or domestic purposes
by-

   (a)  an employee of the company;

   (b)  a director of the company;

   (c)  a member of the company; or

   (d)  a relative of a person referred to in paragraph (a), (b) or (c), the
        property shall be deemed for the purposes of this section to have been
        used at that time by the company for a purpose other than the purpose
        of producing assessable income.



"(29) This section does not apply, and shall be deemed never to have applied,
in relation to a taxpayer, to conversion costs in respect of which the
taxpayer is recouped, or becomes entitled to be recouped, by the Commonwealth,
by a State, by a Territory, by an authority constituted by or under a law of
the Commonwealth, of a State or of a Territory or by any other person and,
where a taxpayer receives, or becomes entitled to receive, an amount that
constitutes to an unspecified extent a recoupment of conversion costs in
respect of a unit of property, the Commissioner may, for the purposes of this
sub-section, determine the extent to which the amount constitutes a recoupment
of that expenditure.



"(30) In this section, unless the contrary intention appears- 'conversion
costs', in relation to a taxpayer, means expenditure incurred by the taxpayer-

   (a)  in converting or adapting an oil-fired unit to operate as a non-
        oil-fired unit; or

   (b)  in converting or adapting a unit of property, not being mobile
        property, for use principally and directly in connection with the
        operation of-

        (i)    a unit of property in respect of which the taxpayer or another
               person has incurred conversion costs of the kind to which
               paragraph (a) or this paragraph applies, being conversion costs
               in respect of which a deduction has been allowed or is
               allowable to the taxpayer or that other person under this
               section; or

        (ii)   a unit of property that has been acquired or constructed, or
               taken on lease, by the taxpayer, being a unit of property in
               respect of which a deduction has been allowed or is allowable
               under Subdivision BB of Division 3 of Part III to-

                (A)  in a case where the taxpayer acquired or constructed the
                     property-the taxpayer or a person to whom the taxpayer
                     leased the property; or

                (B)  in a case where the property was taken on lease by the
                     taxpayer-the taxpayer or the person from whom the
                     property was taken on lease by the taxpayer, being
                     expenditure that-

   (c)  was incurred in respect of a conversion or adaptation effected by the
        taxpayer, the conversion or adaptation having commenced on or after 22
        August 1979; or

   (d)  in a case to which paragraph (c) does not apply-was incurred under a
        contract entered into on or after 22 August 1979;

'lease', in relation to property, means grant a lease of the property or let
the property on hire otherwise than under a hire-purchase agreement;

'leasing company' has the same meaning as in Subdivision B of Division 3 of
Part III; 'liquid petroleum gas' means petroleum or a product obtained by
refining petroleum, being petroleum or such a product that-

   (a)  consists principally of propane or butane or of a mixture of propane
        and butane; and

   (b)  is in a gaseous state at a temperature of 15 degrees Celsius and a
        pressure of 1 atmosphere; 'LPG unit' means plant or an article within
        the meaning of section 54 that-

   (a)  requires energy for the performance of the function, or some or all of
        the functions, for which it was designed; and

   (b)  is designed to obtain, and customarily obtains, that energy directly,
        and solely or principally, from the combustion of liquid petroleum
        gas;

'long-term lease agreement' has the same meaning in relation to property as in
Subdivision B of Division 3 of Part III;

'mobile property' means property that during the performance of the function,
or some or all of the functions, for which it was designed, is not stationary
at all times with respect to its points of contact with the surface or
structure upon which it stands or is located but does not include property
that forms part of a plant installation that is permanently located in a fixed
position;

'non-oil-fired unit' means a unit of property (not being mobile property)
that-

   (a)  requires energy for the performance of the function, or some or all of
        the functions, for which it was designed; and

   (b)  is designed to obtain, and customarily obtains, that energy directly,
        and solely or principally, from a source other than the combustion of
        a petroleum product;

'unit of property', in relation to a taxpayer, means plant or an article
within the meaning of section 54 not being trading stock of the taxpayer.



"(31) Subject to sub-section (32), 'petroleum product' means petroleum or a
product obtained by refining petroleum, but does not include-

   (a)  petroleum of a kind of which not less than 80% by volume is methane;
        or

   (b)  a product derived from petroleum of the kind referred to in paragraph
        (a).



"(32) For the purposes of the application of this section in relation to
expenditure incurred by a taxpayer in respect of the conversion or adaptation
of a unit of property to operate as a non-oil-fired unit or for use
principally and directly as mentioned in paragraph (b) of the definition of
'conversion costs' in sub-section (30), being expenditure that-

   (a)  was incurred before 9 April 1980; or

   (b)  not having been incurred before 9 April 1980, was incurred-

        (i)    in respect of a conversion or adaptation effected by the
               taxpayer, the conversion or adaptation having commenced before
               that date; or

        (ii)   under a contract entered into by the taxpayer before that date,

'petroleum product' means petroleum or a product obtained by refining
petroleum but does not include petroleum of a kind, or such a product of a
kind, that is in a gaseous state at a temperature of 15 degrees Celsius and a
pressure of 1 atmosphere.



"(33) For the purposes of the application of this section in relation to
conversion costs incurred by a taxpayer, a unit of property shall be taken to
be an oil-fired unit if, not being mobile property, the unit of property
requires energy for the performance of the function, or some or all of the
functions, for which it was designed and-

   (a)  the unit of property is designed to obtain that energy directly, and
        solely or principally, from the combustion of a petroleum product and-

        (i)    in a case where the unit of property is a unit of property to
               which paragraph (a) of sub-section (3) applies-the Commissioner
               is satisfied that, if the unit of property was used by the
               taxpayer at any time before the commencement of the conversion
               or adaptation in respect of which the conversion costs were
               incurred, the unit of property, at that time, obtained that
               energy directly, and solely or principally, from the combustion
               of a petroleum product; or

        (ii)   in a case where the unit of property is a unit of property to
               which paragraph (b) of sub-section (3) applies-the Commissioner
               is satisfied that, if the unit of property was used by the
               person to whom the taxpayer leased the property at any time
               before the commencement of the conversion or adaptation in
               respect of which the conversion costs were incurred, the unit
               of property, at that time, obtained that energy directly, and
               solely or principally, from the combustion of a petroleum
               product;

   (b)  in a case to which paragraph (a) of this sub-section does not apply-
        the unit of property is a unit of property to which paragraph (a) of
        sub-section (3) applies and the Commissioner is satisfied that-

        (i)    before the commencement of the conversion or adaptation in
               respect of which the conversion costs were incurred, the unit
               of property was used by the taxpayer; and

        (ii)   at all times when the property was used by the taxpayer before
               the commencement of that conversion or adaptation, the unit of
               property obtained that energy directly, and solely or
               principally, from the combustion of a petroleum product; or

   (c)  in a case to which paragraph (a) of this sub-section does not apply-
        the unit of property is a unit of property to which paragraph (b) of
        sub-section (3) applies and the Commissioner is satisfied that-

        (i)    before the commencement of the conversion or adaptation in
               respect of which the conversion costs were incurred, the unit
               of property was used by the person to whom the taxpayer leased
               the property; and

        (ii)   at all times before the commencement of that conversion or
               adaptation when the property was used by the person to whom the
               taxpayer leased the property, the unit of property obtained
               that energy directly, and solely or principally, from the
               combustion of a petroleum product.



"(34) For the purposes of this section-

   (a)  a person shall be taken to be the owner of any property that is held
        on hire by the person under a hire-purchase agreement; and

   (b)  a reference in this section to the acquisition of property by the
        person shall be read as a reference to the person becoming the owner
        of the property.



"(35) A reference in this section to a unit of property being installed ready
for use by a person shall be read as a reference to the property being
installed ready for use by that person and held in reserve.



"(36) For the purposes of the application of this section in relation to
conversion costs incurred by a taxpayer in respect of a unit of property, a
reference in this section to the converted property being first used or
installed ready for use by the taxpayer or by another person shall be read as
a reference to the property being first used or installed ready for use by the
taxpayer or that other person, as the case may be, after the completion of the
conversion or adaptation in respect of which the conversion costs were
incurred.



"(37) For the purposes of the application of the definition of 'conversion
costs' in sub-section (30), a reference in sub-paragraph (ii) of paragraph (b)
of that definition to a deduction having been allowed, or being allowable to a
taxpayer in respect of property under Subdivision BB of Division 3 of Part III
shall, in a case where the taxpayer is a partnership, be read as including a
reference to a deduction having been allowed, or being allowable, under that
Subdivision in respect of that property to a partner in the partnership.".