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Whether an improved area of land behind a retaining wall is considered a 'structural improvement' for the purposes of section 124ZFB of the Income Tax Assessment Act 1936. Whether a retaining wall is a 'structural improvement' for the purposes of section 124ZFB of the Income Tax Assessment Act 1936.

The dredging and positioning of fill resulting in an area of land does not create a 'structural improvement' within the accepted meaning of the term. It does, however, create an area of land suitable for construction. Retaining walls are accepted as 'structural improvements' within the accepted meaning of that term (subsection 124ZFB(2) of the Income Tax Assessment Act 1936 .

The taxpayer incurred certain costs in the course of construction of a structural improvement. These included costs incurred in the dredging and positioning of fill behind the seawall resulting in the creation of land. It also included costs incurred in the construction of a retaining wall.

The taxpayer, in order to construct a 'structural improvement' was first required to improve the land by constructing retaining walls out of rock and concrete with steel reinforcing, and then fill in the area behind the retaining walls with earth. This created a large area of land which was suitable for the construction of the required 'structural improvement', but which was equally suitable for many other purposes.

The filled in land, although improved, was not in itself a 'structural improvement' in the ordinary sense of the term. Also, the filled in land was not integral with the structure subsequently constructed on that land, as the improved land was merely land on which almost any type of construction could have occurred.

The Explanatory Memorandum to Taxation Laws Amendment Bill No 3 of 1993 (Act No.98 of 1992) , which introduced section 124ZFB of Division 10D of the Income Tax Assessment Act 1936, states (at paragraph 9.18) that earthworks which affect the general usefulness of land are not to be treated as integral to the construction of a structure.

The retaining walls are generally accepted as being 'structural improvements' to which section 124ZFB of the Income Tax Assessment Act 1936 applies (see subsection 124ZFB(2) of the Income Tax Assessment Act 1936 .