Acquisition of Prospecting Information or Mining Right
19.90. The costs of acquiring petroleum prospecting information or a petroleum mining right are deductible over the life of the field under section 124AB along lines identical with those applying in relation to general mining under section 122B. The vendor of such information or right may transfer to a purchaser his deduction entitlement in respect of accrued undeducted allowable capital expenditure and the purchase price is deductible up to a limit constituted by that deduction entitlement. As with general mining, expenditure by the vendor on buildings and improvements in the area the subject of the right is not transferable unless the purchaser acquires rights in respect of them. The notice procedure contemplated by section 122B is echoed in section 124AB.
19.91. The Committee sees no distinction between general mining and petroleum so far as this category of expenditure is concerned and confirms the recommendations made, and the reasons given, in paragraphs 19.42–19.45. The Committee therefore recommends that the total cost of acquiring a petroleum prospecting or mining right or information be deductible over the life of the field. These amendments will, of course, necessitate bringing to account as assessable income the proceeds of sale of such information or rights in the hands of the vendor in the year of sale. This recommendation accords with that made in paragraph 19.46 in relation to general mining.