What are environmental protection activities and what are the limits on deduction?
Subsection 40-755(1) of the Income Tax Assessment Act 1997 (ITAA 1997) allows an immediate deduction for expenditure you incur for the sole or dominant purpose of carrying on environmental protection activities.
Environmental protection activities are activities carried on by or for you:
- To prevent, fight or remedy pollution
- resulting, or likely to result, from your earning activity
- of or from the site of your earning activity
- of or from a site where an entity was carrying on any business that you have acquired and carry on substantially unchanged as your earning activity, and
- To treat, clean up, remove or store waste
- resulting, or likely to result, from your earning activity
- on or from the site of your earning activity
- on or from a site where an entity was carrying on any business that you have acquired and carry on substantially unchanged as your earning activity.
Limits on deductions:
You cannot deduct an amount under section 40-755 for:
- expenditure for acquiring land
- capital expenditure for constructing a building, structure or structural improvement (including an extension, alteration or improvement to any of these)
- a bond or security for performing environmental protection activities
- expenditure to the extent it is incurred in carrying out an activity for environmental impact assessment of your project and
- expenditure to the extent that you can deduct an amount for it under a provision other than Subdivision 40-H.[26]
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