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  • Valuing assets for the real property test

    You may value your real property assets at either their:

    • reduced cost base
    • market value.

    See also:

    Leasing your business premises

    If you lease real property and you use it on a continuing basis in your business activity, you may include the market value or the reduced cost base of either the lease or the underlying real property, in the total you use to meet the $500,000 threshold.

    In calculating the market value of the lease, you may take into account such things as:

    • the amount of your lease payments
    • the term of the lease
    • any premium payable.

    In calculating the reduced cost base of the lease, you may take into account any premium paid for entering the lease, but not the value of the periodical lease payments.

    Leasing your business premises and installing your own fixtures

    These fixtures are subject to the rules for the other assets test.

    Assets used in more than one business activity

    If you use real property in two or more business activities that are not similar, you must divide the value of the property between the different activities. The proportion of the real property value that is assigned to each activity will then count towards the total real property value for that activity.

    If you undertake similar business activities in the same year, you may combine the value of the real property you use in those activities to meet the $500,000 threshold.

    Using real property for private purposes

    If you use real property partly for business and partly for private purposes, you only include the value of that portion used for business purposes.

      Last modified: 02 May 2018QC 16244