Issue
Can a taxpayer deduct an amount under Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997) for capital expenditure incurred in the construction of a bowling green from synthetic or artificial materials?
Decision
Yes. The taxpayer can deduct an amount under Division 43 of the ITAA 1997 for capital expenditure incurred in the construction of a bowling green from synthetic or artificial materials.
Facts
The taxpayer is a sporting club and constructed a bowling green from synthetic or artificial materials.
Reasons for Decision
In order to deduct an amount for the bowling green constructed from synthetic or artificial materials under Division 43 of the ITAA 1997, the bowling green must first be a capital work to which Division 43 of the ITAA 1997 applies.
Subsection 43-20(2) of the ITAA 1997 provides that Division 43 of the ITAA 1997 applies to capital works being structural improvements begun after 26 February 1992.
Subsection 43-20(3) of the ITAA 1997 gives some examples of those structural improvements. In particular, paragraph 43-20(3)(a) of the ITAA 1997 lists sealed roads, sealed driveways, sealed car parks, sealed airport runways, bridges, pipelines, lined road tunnels, retaining walls, fences, concrete or rock dams and artificial sports fields as examples of structural improvements.
Further, subsection 43-20(4) of the ITAA 1997 provides that Division 43 of the ITAA 1997 does not apply to certain structural improvements. In particular, paragraph 43-20(4)(b) of the ITAA 1997 excludes structural improvements being earthworks that merely create artificial landscapes, for example, grass golf course fairways and greens, gardens, and grass sports fields.
Therefore, a bowling green constructed from synthetic or artificial materials would be a structural improvement under paragraph 43-20(3)(a) of the ITAA 1997 and would not be excluded under paragraph 43-20(4)(b) of the ITAA 1997. As such, a bowling green constructed from synthetic or artificial materials is a capital work to which Division 43 of the ITAA 1997 applies. Consequently, an amount can be deducted under Division 43 of the ITAA 1997 for this type of bowling green.
Amendment History
Date of Amendment Part Comment 26 May 2017 Legislative References Add "paragraph 43-20(3)(a)" and "paragraph 43-20(4)(b)"under Income Tax Assessment Act 1997. Delete "section 43-20" under Income Tax Assessment Act 1997.
Date of Amendment | Part | Comment
26 May 2017 | Legislative References | Add "paragraph 43-20(3)(a)" and "paragraph 43-20(4)(b)"under Income Tax Assessment Act 1997. Delete "section 43-20" under Income Tax Assessment Act 1997.