Expenditure Incurred in Quarrying

19.96. Following the pattern of the mining industry, the quarrying industry incurs expenditures in the following categories:

  • (a) Location of deposits of extractive materials, geological and other surveys, drilling, analysing samples, etc., which expenditure, speaking generally, is similar to that incurred in gaining what is described in Division 10 of the Act as ‘mining or prospecting information’.
  • (b) Securing rights to conduct the extractive operation, including obtaining the requisite permits under State legislation and in the acquisition of sites required for the extractive operations.
  • (c) The preparation of the site for the commencement of operations: removal of overburden, where the expenditure is of a capital nature; construction of access roads, buildings and other civil engineering works; and taking environmental protection measures.
  • (d) Closing down extractive operations, the removal of plant, demolition of structures, restoring the surface of the land and meeting other requirements

      ― 314 ―
    of authorities responsible for supervision of the extractive industry and of landowners.

19.97. There is no provision in the Act for the deduction of expenditures of this nature. Yet some of them are classified as allowable capital expenditure in Division 10 of the Act (see section 122A) in relation to prescribed mining operations in the field of general mining. And at least those of them comprised in caregories (a), (b) and (c) above are, in accordance with established accountancy principles, of a capital nature.

19.98. The submissions point out that in the United Kingdom capital allowances are granted to persons who incur capital expenditure in connection with the working of any source of mineral deposits of a wasting nature (see the Capital Allowances Act 1968, Chapter III). ‘Mineral deposits’ are defined in section 87 (1) of that Act as including ‘any natural deposits capable of being lifted or extracted from the earth’.

19.99 In the United States a percentage depletion allowance is afforded in respect of the extraction of clay, granite, limestone, gravel, dolomite and all other non-metallic minerals and other substances, the extraction of which is not accepted as mining under the Australian taxation legislation. The lowest of these rates is 5 per cent, which applies where these materials are sold as ballast, road materials, concrete aggregates, etc. For the operation of the percentage depletion allowance, reference should be made to Appendix A to this Chapter.

19.100. Submissions to the Committee have suggested that a new and separate Division be included in the Act for application to the quarrying industry. Broadly, the provisions of the suggested new Division should closely follow the lines of Division 10 of the Act in the form in which it stood prior to the 1974 amendments. The submissions have also proposed amendments to Division 10AAA to extend its provisions to cope with capital expenditure on facilities for the transport of products extracted by the quarrying industry.