(1) You can deduct expenditure to the extent that you incur it in becoming the * holder of a * registered emissions unit.
(2) You deduct the expenditure in the income year in which you start to * hold the * registered emissions unit.
Australian carbon credit units
(4) You cannot deduct under this section expenditure you incur in becoming the * holder of an * Australian carbon credit unit issued to you in accordance with the Carbon Credits (Carbon Farming Initiative) Act 2011 unless you incur the expenditure in preparing or lodging:
(a) an application for a certificate of entitlement (within the meaning of that Act); or
(b) an offsets report (within the meaning of that Act).
No deduction if sale proceeds would not be assessable
(5) You cannot deduct under this section expenditure you incur in becoming the * holder of a * registered emissions unit if, assuming that you had sold the unit to someone else immediately after you started to * hold the unit, the proceeds of the sale would not have been included in your assessable income under section 420- 25.
Note: Under the International Tax Agreements Act 1953 , for some foreign residents, the proceeds of the sale of a registered emissions unit are not assessable income in Australia.