INCOME TAX ASSESSMENT AMENDMENT ACT (No. 3) 1977
An Act to amend the law relating to income tax.
BE IT ENACTED by the Queen, and the Senate and House of Representatives of the Commonwealth of Australia, as follows:
Short title, &c.
1. (1) This Act may be cited as the Income Tax Assessment Amendment Act (No. 3) 1977.
(2) The Income Tax Assessment Act 1936 is in this Act referred to as the Principal Act.
Commencement
2. This Act shall come into operation on the day on which it receives the Royal Assent.
Exemptions
3. (1) Section 23 of the Principal Act is amended by inserting after paragraph (o) the following paragraph:
“(pa) income derived by a person from the sale, transfer or assignment by the person of his rights to mine, in a particular area in Australia, for gold or for any prescribed metal or prescribed mineral, being a person who is a bona fide prospector, that is
to say—
(i) a person (other than a company) who has personally carried out the whole or the major part of the field work of prospecting for gold or for the prescribed metal or prescribed mineral, as the case may be, in that area, or has contributed to the expenditure incurred in the work of prospecting and development in that area; or
(ii) a company which has itself carried out the whole or the major part of such field work,
except that—
(iii) where, under Division 10, or under the Division for which that Division was substituted, a deduction has been allowed or is allowable from the assessable income of the taxpayer of any year of income in respect of expenditure on exploration or prospecting in a particular area, this paragraph applies to so much only of the income of the taxpayer derived from the sale, transfer or assignment by him of rights to mine in that area as exceeds the sum of any deductions so allowed or allowable; and
(iv) this paragraph does not apply in respect of a sale, transfer or assignment of any right to mine for a metal or mineral, other than gold, if—
(a) any party or parties of the one part to the sale, transfer or assignment has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the other part; or
(b) any person or persons has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the one part and a party of the other part to the sale, transfer or assignment;
(2) The amendment made by sub-section (1) applies in relation to income derived after 26 October 1977 from the sale, transfer or assignment of rights to mine, other than income derived from the sale, transfer or assignment in pursuance of a contract made on or before that date.
(3) Except where regulations made for the purposes of paragraph 23(pa) of the Principal Act as amended by this Act otherwise provide, any metal or mineral specified in regulations prescribing metals and minerals for the purposes of paragraph 23(p) of the Income Tax Assessment Act 1936, as in force immediately before the commencement of the Income Tax Assessment Act (No. 5) 1973, is a prescribed metal or prescribed mineral, as the case may be, for the purposes of that first-mentioned paragraph.
Residual previous capital expenditure
4. Section 122c of the Principal Act is amended by adding at the end thereof the following sub-section:
“(3a) Where an amount of income derived by the taxpayer in a year of income, being the year of income of the taxpayer in which 27 October 1977 occurred or a subsequent year of income, (in this sub-section referred to as the ‘year of sale’) from the sale, transfer or assignment of rights to mine on any mining tenement is or has been exempt from income tax by virtue of paragraph (pa) of section 23 and, in relation to that tenement—
(a) any excess amounts of expenditure referred to in sub-section (3) of section 123aa of the Income Tax Assessment Act 1936-1967 have, under that sub-section, been required to be deemed to be expenditure in respect of which the taxpayer was entitled to a deduction under section 122 of that Act; or
(b) any excess amounts of expenditure referred to in sub-section (3) of section 122j of this Act have been or are required to be deemed to be allowable capital expenditure incurred in the year of sale or a prior year of income,
the residual previous capital expenditure of the taxpayer as at the end of the year of sale shall be reduced by so much of those excess amounts as has not been allowed, and is not allowable, as a deduction under section 122 of the Income Tax Assessment Act 1936-1967 or under section 122d of this Act, but so that the total amount of the reductions under this section shall not exceed the amount of the exempt income.
Exploration and prospecting expenditure
5. (1) Section 122j of the Principal Act is amended—
(a) by omitting from sub-section (3) “section 122e” and substituting “sections 122da and 122e”;
(b) by inserting after sub-section (3) the following sub-section:
“(3a) Where—
(a) an amount of income derived by the taxpayer in a year of income, being the year of income of the taxpayer in which 27 October 1977 occurred or a subsequent year of income, (in this sub-section referred to as the ‘year of sale’) from the sale, transfer or assignment of rights to mine on any mining tenement is or has been exempt from income tax by virtue of paragraph (pa) of section 23 of this Act; and
(b) in relation to that tenement, there are any excess amounts of expenditure referred to in sub-section (3) of this section that have not been, and are not required to be, deemed to be allowable capital expenditure incurred by the taxpayer in the year of sale or a prior year of income,
sub-section (3) of this section does not operate so as to require the taxpayer to be deemed to have incurred, as allowable capital expenditure, in any year of income after the year of sale, any part of those excess amounts that does not exceed the amount that remains after deducting from that exempt income the amount, if any, by which, in relation to that tenement, the residual previous capital expenditure of the taxpayer as at the end of the year of sale has been reduced under sub-section (3a) of section 122c.”; and
(c) by inserting after sub-section (4) the following sub-section:
“(4a) Where—
(a) an amount of income derived by the taxpayer in a year of income, being the year of income of the taxpayer in which 27 October 1977 occurred or a subsequent year of income, (in this sub-section referred to as the ‘year of sale’) from the sale, transfer or assignment of rights to mine on any mining tenement is or has been exempt from income tax by virtue of paragraph (pa) of section 23 of this Act; and
(b) in relation to that tenement there are any excess amounts of expenditure referred to in sub-section (4) that have not been, and are not required to be deemed, for the purposes of sub-section (1), to have been incurred by the taxpayer in the year of sale or in a prior year of income,
sub-section (4) does not operate so as to require the taxpayer to be deemed to have incurred, in any year of income after the year of sale, any part of those excess amounts that does not exceed so much of the amount of the exempt income as has not been applied—
(c) under sub-section (3a) of section 122c in reduction of the residual previous capital expenditure of the taxpayer as at the end of the year of sale; or
(d) under sub-section (3a) of this section in reduction of the amount of expenditure that, but for that sub-section, would be deemed to be allowable capital expenditure incurred by the taxpayer in any year of income after the year of sale.”.
(2) The amendment made by paragraph (1)(a) shall be deemed to have come into operation on 20 December 1976.
