Bills Digest 107 1995-96
Development Allowance Authority Amendment Bill 1996
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.
This page was prepared by the Parliamentary Library, Commonwealth of
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Last updated: 26 June 1996
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