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Licenced seismic data a depreciating asset, says ATO

Licenced seismic data a depreciating asset, says ATO

James Macky, Tim Lynch & Michael Baartz discuss the ATO's finalised view on the income tax treatment of expenditure incurred by an entity that collects and processes seismic data that is then non-exclusively licenced to multiple clients.

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The Australian Taxation Office (ATO) has finalised its view on the income tax treatment of expenditure incurred by an entity that collects and processes seismic data that is then non-exclusively licenced to multiple clients.

Its position is that expenditure on such data is:

  • on capital account
  • mining, quarrying or prospecting information (MQPI) as defined in subsection 40-730(8) of the Income Tax Assessment Act 1997 (ITAA 1997)
  • a depreciating asset

This was set out in Taxation Ruling 2019/4 (Income tax: capital allowances: expenditure incurred by an entity that collects, processes and provides multi-client seismic data) (TR 2019/4).

The ruling applies to entities referred to as ‘data providers’ who carry on a business of providing seismic data to customers in the mining industry, but who do not carry on mining operations themselves.

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