Peter Costello

Media Releases

Uniform Capital Allowance System Release of Exposure Draft Legislation



Today the Government is releasing an exposure draft of legislation for the Uniform Capital Allowance System (UCA). The UCA, announced by the Government on 11 November 1999, will take effect from 1 July 2001. It will contain common rules for writing off capital expenditures on the effective life basis and should significantly reduce the existing volume of legislation.

The UCA will allow certain capital expenditures not currently deductible to be written off over the life of the project to which the expenditure relates. These include feasibility study costs, site preparation costs and environmental assessment costs. The UCA also provides write off for a number of specific types of capital expenditure, such as the costs of raising equity, establishing or converting a business structure and defending against takeovers, which in the past were not deductible.

Following its announcement in November 1999, the Government has been consulting about proposed enhancements to the UCA and, as a result, has made a number of changes that will improve the UCA’s operation.

The release of exposure draft legislation for the UCA provides the opportunity for public comment and again demonstrates the Government’s commitment to consult on the implementation of its business tax reforms.

Under the UCA legislation, the existing immediate deduction for the cost of assets used in exploration and prospecting will be retained. There will also be an immediate write off from 1 July 2000 for depreciating assets costing no more than $300 used by taxpayers predominantly in deriving non-business income.

In addition, the legislation provides greater certainty for taxpayers relying on the effective lives of assets as determined by the Commissioner of Taxation. If the asset was acquired or its construction started before 21 September 1999, taxpayers relying on the Commissioner’s determination of effective life can rely on the determination that applied when the asset was acquired or construction started. If the asset was acquired or construction started after 21 September 1999, taxpayers can rely on the Commissioner’s determination that applied at the time the asset was acquired or construction started, provided they begin to use the asset or install it ready for use within three years. Otherwise, they are able to rely on the effective life applying when the asset begins to be used or is installed ready for use.

The exposure draft legislation, the explanatory statement and additional information can be obtained from the Treasury website ( Comments on the exposure draft should be received by Monday 29 January 2001 and should be sent to:

Assistant Commissioner
Intangibles/Physical Assets
Australian Taxation Office
PO Box 900

or can be emailed to

Submissions will be treated as public unless the author indicates to the contrary. Submissions lodged electronically will be published on the Treasury web site.

More information on the exposure draft can be obtained from the Treasury Tax Reform Help Line on 13 63 20 or the Treasury website.

18 December 2000

Contacts: Gerry Antioch
(02) 6263 4477

Chris Sheehan
Australian Taxation Office
(02) 6216 2039


18 Dec 2000

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