The Issues Log

Section / Provision Income Tax Act 2004

Income Tax Act 2004, section DO 4

Date Received

The new Section DO 4 prohibits further deductions for any unamortised balance of capitalised development expenditure where the original expenditure was incurred prior to the 1995-96 income year - Refer Sections DO 4(2)(d) and 3(d).

The new Section DO 4 also prohibits any deduction for anything described in any of Sections DO 1 to DO 3 - Refer Sections DO 4(2)(c) and (3)(c).

A new Section DZ 13 has been inserted in the Act.  DZ 13 attempts to implement a policy decision to write off (as a deduction in the 2006 income year) any balance of capitalised development expenditure originally incurred before the 1995-96 income year, that remains unamortised as at the taxpayer's 2005 balance date.

Without this (DZ 13) provision unamortised balances of pre 1995-96 expenditure would have fallen into a "black hole".

NA

•  The Panel considers that there is a legislative change arising from an intended policy change in section DZ 13 of the 2004 Act.

•  The Panel recommended that section DZ 13 of the 2004 Act should be amended retrospectively by broadening section DZ 13 and adding a reference in Schedule 22A to this intended policy change.

These recommendations have been reported to the Minister of Revenue and he has approved them. Officials have recommended to FEC that the amendments be included in the Taxation (Base Maintenance and Miscellaneous Provisions) Bill introduced in November 2004.