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  • Separate assets
    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    For CGT purposes, there are exceptions to the rule that what is attached to the land is part of the land. In some circumstances, a building or structure is considered to be a separate CGT asset from the land.

    Other improvements to an asset (including land) acquired before 20 September 1985 may also be treated as a separate CGT asset.

    Buildings, structures and other improvements to land you acquired on or after 20 September 1985

    A building, structure or other capital improvement on land that you acquired on or after 20 September 1985 will be a separate CGT asset from the land if a balancing adjustment provision applies to it. For example, a timber mill building is subject to a balancing adjustment if it is sold or destroyed, so it is treated as a separate asset from the land.

    Buildings and structures on land acquired before 20 September 1985

    A building or structure on land that you acquired before 20 September 1985 will be a separate asset if:

    • you entered into a contract for the construction of the building or structure after that date, or
    • construction began on or after that date.
    Other capital improvements to pre-CGT assets

    If you make a capital improvement to a CGT asset you acquired before 20 September 1985, this improvement will be treated as a separate asset and be subject to CGT if certain conditions are met. These conditions relate to the improvement thresholds in the table below.

    If these conditions are met, when a CGT event happens to the original asset, the cost base of the capital improvement must be:

    • more than the improvement threshold for the year in which the event happens, and
    • more than 5% of the amount of money and property you receive from the event.

    If there is more than one capital improvement and they are related to each other, they are treated as one separate CGT asset if the total of their cost bases is more than the threshold.

    The improvement threshold is changed to take account of inflation. The thresholds for 1985-86 to 2002-03 are shown in the following table.

    Improvement thresholds for 1985-86 to 2002-03

    Income year

    Threshold

    1985-86

    $50,000

    1986-87

    $53,950

    1987-88

    $58,859

    1988-89

    $63,450

    1989-90

    $68,018

    1990-91

    $73,459

    1991-92

    $78,160

    1992-93

    $80,036

    1993-94

    $80,756

    1994-95

    $82,290

    1995-96

    $84,347

    1996-97

    $88,227

    1997-98

    $89,992

    1998-99

    $89,992

    1999-2000

    $91,072

    2000-01

    $92,802

    2001-02

    $97,721

    2002-03

    $101,239

     

    Example: Adjacent land

    On 1 April 1984, Dani bought a block of land. On 1 June 2003, she bought another block adjacent to the first one. Dani amalgamated the titles to the two blocks into one title.

    The second block is treated as a separate CGT asset acquired on or after 20 September 1985 and is therefore subject to CGT.

    End of example
    Last modified: 25 Feb 2020QC 27448