Business (Issue 34)

Tax Law Amendment— Its affect on the Industry

CMPA Associate Member Mead Partners—Chartered Accountants have looked into the Tax Law Amendment (2007 Measures No. 2) Bill 2007 on behalf of the Association’s Members.

After reviewing the relevant information including the legislation prior to the amendment, the amendment itself and the Bill’s explanatory memorandum, it seems that the bill passed is merely to clarify the current legislation.

Unfortunately there are no new or additional tax concessions or beneficial provisions included by the amendments.

What does this mean?

This means that a quarry can self assess the effective life of their quarry and depreciate it accordingly using either the diminishing value method or the straight line method. The effective life of the mine can also be reassessed if the life of the right is no longer accurate due to changed circumstances.

Is this different to what was previously allowed?

While it was always intended that the effective life of mining/quarrying rights be self assessed, the way the law is currently written gave rise to the possible interpretation that the effective life of the mine was the whole life of the mine, not the remaining life.

Consequently, the changes passed in the Tax Law Amendment are to clarify that the effective life of a mine/quarrying right is the remaining life of the mine/quarry.

There was also another possible interpretation in the old legislation that required the holder of the mining right to assess the life of the mining right each year. This was not intended and has been rectified in the new legislation.

The main effect of the changes to the legislation are to clarify what was originally intended, not to create any new provisions.

It should be noted that while you can self assess the effective life of the mine/quarry, per Div 40-95(11)b it must be done using an appropriate accepted industry practice.

Please note also that as the bill was only recently passed the changes to the ITAA 1997 has not yet been updated on various websites such as the ATO.

For further information it is advised that you seek professional advice on the matter.

Mead Partners can be contacted on 03 9523 2277.

VCAT and Work Authorities

Recently, the Secretariat was asked by a Member, “Is the VCAT system working for Work Authority developers or is this process a hindrance?” This question was asked when the idea that all Work Authority (WA) applications are directed straight to local government was mooted.

Anecdotal evidence from Members suggested that ‘everyone‘ went to VCAT. It also suggested that this was mainly on amenity type issues that overall, had little bearing on the operation.

This however is only anecdotal evidence and we all know that only those hurt hardest will give answers!

Accordingly, Sarah reviewed a random* selection of VCAT decisions from the VCAT database (*random being those that were found with the keyword ‘quarry‘).

This investigation identified 12 cases promptly.

Following is a brief summary of those cases:

• 10 were regarding new applications, 1 was regarding a variation (however VCAT rejected the argument), and 1 was regarding the subdivision of land neighbouring an existing quarry (the subdivision was refused)
• Of the 10, 11 resulted in the Work Authority being granted, however with additional conditions. Only 1 was rejected (due to a rehabilitation plan not meeting the communities’ needs)
• 9 were in regional areas
• There was no consistency or trends established in regards to the local government, judge or applicant
• 5 were raised by the Work Authority developer, and six raised by community

This made interesting reading, with two interesting but very different comments being:

“While we acknowledge that the site represents a (small) exploitable resource, the degree of management required to address operational and very likely post operational environmental issues and rehabilitation use, in our opinion, outweighs the economic benefit to be gained.”

and at the other degree:

“In my view, an expectation that the land zoned Rural is there to provide a picturesque and tranquil environment for residential use is quite misguided. There is nothing in the zone purpose or the decision guidelines to suggest that residential amenity is an important consideration.”

CMPA Members – See the web version of the newsletter (www.cmpavic.asn.au—Members Area) for a link to the VCAT decisions website.

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