Income Tax Severed Letters

Principal Issues: 1. In the hypothetical scenario presented, where expenditures were incurred in (i) the taxation year before the related Class 57 equipment was acquired, (ii) the taxation year the Class 57 equipment was acquired and (iii) the taxation year after the related Class 57 equipment was acquired, does the deeming rule in paragraph 127.44(9)(e) apply to the expenditure incurred in the taxation year after the Class 57 equipment was acquired? 2. If the answer to question 1 is "yes", does this rule deem the expenditures incurred in the two previous taxation years to have been incurred in the latest of the three years?

Position: 1. Yes; paragraph 127.44(9)(e) applies to expenditures incurred in taxation years before and after the related Class 57 equipment is acquired. 2. No; the application of 127.44(9)(e) to the expenditure incurred in the taxation year after the related Class 57 equipment is acquired does not change the timing of the related expenditures incurred in the previous years.

Reasons: The conclusions are based on a textual, contextual and purposive analysis of the CCUS legislation in section 127.44.