WARNING:
This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 26 June 1996
CONTENTS
Date Introduced: 20 June 1996
House: Senate
Portfolio: Treasury
Commencement: Royal Assent
To allow certain project restructures to be eligible for the
Development Allowance.
In the One Nation Statement of 26 February 1992, the
then Prime Minister announced the introduction of a development
allowance for approved large scale investments. The Government's
announcement was implemented by the Development Allowance
Authority Act 1992 (the Principal Act) and the Taxation
Laws Amendment Act (No. 3) 1992. The then Government's
objective in providing the allowance is to promote
... an early upturn in investment in
new plant and equipment for projects which offer benefits for our
competitiveness in world markets.(1)
The Principal Act provided for the establishment of the
Development Allowance Authority (the Authority) which determines
the eligibility of projects with a gross capital cost of $50
million or more for the development allowance. The development
allowance provides a deduction equal to 10% of eligible plant
expenditure in the first year that a plant is used or installed
ready for use. In order to be eligible for the development
allowance, an applicant has to meet certain qualifying criteria,
including that their project involved expenditure of at least $50
million; their project was not in an industry that has an effective
rate of assistance of more than 10%; and that the expenditure, or
proposed expenditure, is in establishing a new productive facility,
or in expanding, improving or upgrading an existing productive
facility.
Since its inception, the DAA has received more than 500
applications, involving over $100 billion in capital expenditure
through to the year 2002.(2) The majority of applications relate to
mining projects, especially in Western Australia, with the
remainder relating to projects in the manufacturing sector.(3)
On 13 July 1995, the then Treasurer announced that the
Government would amend the Development Allowance Authority Act
1992 to allow bona fide project restructures to be eligible
for the allowance. The then Treasurer also stated that the
amendments would operate retrospectively from 1 January 1993.
This Bill is substantially the same as one introduced on 27
September 1995. That Bill lapsed with the dissolution of Parliament
for the 1996 election.
The Explanatory Memorandum to the 1995 Bill states that the cost
of the proposed amendments is estimated to be $10 million per annum
and the total cost over the nine years from 1993-94 to 2001- 02 is
expected to be about $92 million. Identical figures are given in
the Explanatory Memorandum to this Bill.
Item 10 of Schedule 1 inserts new
subsections 42(1A) and 42(1B) into the
Development Allowance Authority Act 1992 (the Principal
Act). New subsection 42(1A) provides that an entity that has sought
registration of plant expenditure may apply to the Development
Allowance Authority (DAA) to have that application varied in
certain circumstances, including, for example, changes to the
expenditure, the project or the entities carrying out the project.
New subsection 42(1B) provides that new subsection 42(1A) only
applies to variations due to a change in circumstances after 1
January 1993.
Item 17 of Schedule 1 repeals Part 6 of the
Principal Act and inserts new Part 6, providing
for the transfer of a whole or part of the benefits of an
application, registration or certificate.
Proposed Part 6 sets up a system to transfer
the benefit of an application, registration or certificate from the
entity that had applied for the benefit to the entity that has
taken over or agreed to take over, the completion of the
project.
Proposed 53 sets out the criteria for granting
an application. For example, the DAA must not grant an application
unless it is satisfied that the taking over of the project by the
transferee is for genuine commercial reasons and to enable the
completion of the project.
Item 31 of Schedule 1 is a transitional
provision which provides:
- where an application for registration of plant expenditure was
refused before the commencement of this Bill, but would not have
been refused had this Bill been in force, the DAA may treat the
refusal as not having occurred;
- where an application for registration of plant expenditure was
withdrawn before this Bill commenced, but the DAA determines that
an application for transfer could have been made if the application
had not been withdrawn and this Act was in force, the DAA may treat
the withdrawal as not having occurred; and
- where an application for registration was granted for an amount
less than that sought, but would have been greater had this Act
been in force, the DAA may treat the greater amount as the correct
amount and treat the registration accordingly.
(1) Development Allowance Authority Bill 11992, Second
Reading Speech, p. 1.
(2) Development Allowance Authority, Annual Report
1994-95, p. 5.
(3) Ibid.
Ian Ireland Ph. 06 277 2438
26 June 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
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ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library,
1996.
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Last updated: 26 June 1996
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