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Allowable Capital Expenditure: Costs of Company Formation and Capital-raising

19.62. Under the former section 122A (1) (e), costs of company formation and capital-raising incurred by a mining company which conducted ‘prescribed mining operations’ (as defined in section 122 (1) ) were classified as “allowable capital expenditure’ and were therefore immediately deductible under section 122E or on a life-of-mine basis under section 122D, subject to the conditions appearing in those sections. Section 122A (1) (e) had a relatively brief existence: it was specifically added as a category of allowable capital expenditure in 1969 but has now been deleted. There is provision for the retention of a transitional measure in relation to such expenditure between 17 September 1974 and 30 June 1976, provided it is incurred under a contract entered into on or prior to 17 September 1974. The Committee supports this amendment: this category of expenditure cannot be regarded as being peculiar to mining or justifying the taxation treatment formerly accorded it under Division 10.

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