Capital Allowances: project pools - project amount - information

Was the taxpayer's expenditure an amount incurred to obtain information associated with the project they proposed to carry on within subparagraph 40-840(2)(d)(v) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. The taxpayer's expenditure was an amount incurred to obtain information associated with their project within subparagraph 40-840(2)(d)(v) of the ITAA 1997.

The taxpayer had identified with some certainty a project that they proposed to carry on for a taxable purpose for a determinate period. The taxpayer was required to lodge a development permit application with supporting material to the local government authority for approval to proceed with the project.

The taxpayer incurred capital expenditure in engaging a town planner for the preparation and submission of the application. The taxpayer also paid for a report on access and services (for example, how and where to access utilities and services such as power and telecommunication) for their project.

Broadly, section 40-830 of the ITAA 1997 allows a deduction over the project life of a project for project amounts allocated to a project pool.

To be a 'project amount' within subsection 40-840(2) of the ITAA 1997, an amount must be capital expenditure which, in addition to satisfying paragraphs 40-840(2)(a) to 40-840(2)(c) of the ITAA 1997, is one of the amounts specified in subparagraphs 40-840(2)(d)(i) to 40-840(2)(d)(vii) of the ITAA 1997. The amount specified in subparagraph 40-840(2)(d)(v) of the ITAA 1997 is an amount incurred to obtain information associated with the project.

Information is associated with the project if the information obtained is about the substance of the project. In the case of a project which the taxpayer proposes to carry on, there would have to be some certainty of the subject of the project before it could be shown that the information being obtained was associated with the project.

The information about access and services and the information produced by the town planner was information about the substance of a project sufficiently identified to make application for a development permit with the local government authority.

Accordingly, the taxpayer's expenditure was an amount incurred to obtain information associated with their project within subparagraph 40-840(d)(2)(v) of the ITAA 1997.