CA29260 - PMA: Miscellaneous: Abortive expenditure

CAA01/S67

A person may incur capital expenditure on plant or machinery but never became the owner of the asset. For example, the supplier may default or the buyer may withdraw from the contract. The buyer’s expenditure is abortive expenditure. Where this happens the buyer will not be able to satisfy the ownership condition that needs to be satisfied before PMAs can be claimed.

In a case like that Section 67 CA23310 may let the buyer claim PMAs. Section 67 applies where a person incurs capital expenditure on the provision of plant under a hire purchase or similar contract that provides that the person shall or may become the owner of the plant on performance of the contract. When it applies it treats the person as the owner of the plant during the contract. This lets the person satisfy the ownership condition and claim PMAs.

If the person ceases to be entitled to the benefit of the contract a disposal value will be brought to account under CAA01/S68 (3) CA23330.