Transportation Expenditure: Division 10AAA
19.73. Prior to the 1974 amendments, expenditure on a large range of transport facilities was deductible over ten years; this expenditure did not have to be incurred by a mining enterprise as such and was deductible in equal annual instalments over a period of ten years commencing with the first income year in which the facility was used primarily and principally for the transport of minerals. It was not necessary for the person incurring the expenditure to own the facility: the deduction was available to a contributor. The range of facilities included in this special deduction included railways, roads and pipelines. The allowance under Division 10AAA was obviously framed as an incentive provision to enable accelerated amortisation of the substantial capital expenditure involved in servicing the mine in light of the fact that such facilities may have little value when mining operations are terminated.
19.74. With transitional provisions, the period of amortisation has been extended to twenty years and therefore halves the benefit formerly available. The amendment will also affect cash-flow and take away much of the incentive effect of Division 10AAA, bringing it more closely into line with Division 10 deductions on a life-of-mine basis. The Committee does not consider it appropriate to make any recommendation regarding this amendment.