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In the context of a major construction project, whether capital expenditure on excavating existing roads, building temporary ancillary roads, and restoration work, is construction expenditure attributable to a particular construction expenditure area in relation to a particular taxpayer for the purposes of Division 43 (Income Tax Assessment Act 1997 (ITAA 1997)).

The cost incurred on building temporary ancillary roads and restoration work on an area not leased or owned by the taxpayer during the income year is not expenditure on a construction expenditure area in respect of that taxpayer for the purposes of Division 43 (section 43-75 (ITAA 1997)).

The taxpayer commences a construction project to build a factory it intends to use in its business. The construction project involves excavation through existing roads, the building of temporary ancillary roads, and the restoration of roads that have been damaged in the course of construction and restoration of other areas used for temporary roads. The ancillary roads are not leased or owned by the taxpayer.

Division 43 (ITAA 1997) provides income tax deductions for construction expenditure attributable to a particular construction expenditure area that is owned or leased by the taxpayer and used during the income year for the purposes of producing assessable income. Construction expenditure is capital expenditure incurred in respect of the construction of capital works. Capital works includes buildings and extensions, alterations or improvements to a building and structural improvements, or extensions, alterations or improvements to structural improvements.

Capital expenditure on building temporary roads ancillary to the project, and restoration of damaged roads in an area that is not owned or leased by the taxpayer during the income year is not expenditure incurred on a construction expenditure area in respect of that taxpayer for the purposes of Division 43 (ITAA 1997).

Capital expenditure on excavating existing roads where the excavation is integral to the construction of a building that is situated on land owned or leased by the taxpayer is regarded as construction expenditure attributable to a construction expenditure area in respect of that taxpayer under Division 43.(ITAA 1997). However, any deductions that are allowable to the taxpayer only arise upon the completion of the construction and apply for any income year during which the taxpayer uses the area for the purpose of producing assessable income.