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Sunday, 2 September 2012

Immediate deduction for environmental protection activities

  1. Since July 1, 2001, tax legislation has enabled some types of capital expenditure to be immediately deductible against assessable income. Environmental Protection Activities (EPA) is one such type of expenditure.
  2. EPA are activities undertaken to prevent, fight and remedy pollution and to treat, clean up, remove and store waste from a site where a taxpayer partakes in an income earning activity.
  3. An income earning activity includes activities that are carried on, or proposed to be carried on, for the purpose of producing assessable income (other than a net capital gain), exploration or prospecting, and mine site rehabilitation.
  4. An immediate deduction is also available for expenditure on EPA relating to a site where the pollution or waste was caused by another entity which leased the site from the taxpayer.
  5. A deduction is not available for:
    • EPA bonds and security deposits;
    • Expenditure on acquiring land;
    • Expenditure on constructing or altering buildings, structures or structural improvements; and
    • Expenditure that forms part of the cost of a depreciating asset.
  6. A recoupment of expenditure may be included in the taxpayers assessable income