On 13 June 2018, the ATO released a draft Tax Determination, TD 2018/D2 (Draft Determination), clarify the preliminary position of the Commissioner on what constitutes ‘use’, and potentially ‘first use’, of a mining, quarrying or prospecting right that is a depreciating asset for the purposes of subsection 40-80(1) of the Income Tax Assessment Act 1997 (1997 Act).

The crux of the Draft Determination is that a taxpayer will have ‘used’ a mining, quarrying or prospecting right, thereby enlivening subsection 40-80(1) of the 1997 Act where the taxpayer uses the relevant land in a way only permitted due to the holding of the right, but excluding uses which are merely trivial or incidental, even where such uses are technically enabled by the fact of holding the right.