Commentary on Sections Overview Overview Section 166: Allocation of site preparation expenditure
686.This section spreads site preparation expenditure over the useful life of the site. It is based on section 91B of ICTA.
687.Subsection (1) calculates the allowable expenditure for a period of account by means of a formula.
688.Subsection (2) explains how to arrive at the “residual expenditure”, part of which is allowed as a trading deduction by subsection (1).
689.It is necessary to exclude amounts for which capital allowances have been given. In the case of expenditure incurred before 1989, it is also necessary to exclude part of the “unrelieved old expenditure”, an expression defined in subsection (4).
690.Most waste disposal sites have a life of only four or five years. But some, notably in the nuclear waste industry, have preparation expenditure dating from before 6 April 1989. So this section preserves the rules for the pre-1989 expenditure.
691.Subsection (3) uses a formula to arrive at the amount of the unrelieved old expenditure that is to be excluded from the calculation in subsection (1).