• Impact of CGT on capital improvements to land

    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

    There are limited circumstances where a building or structure constructed on land you acquired on or after 20 September 1985 is considered to be a separate CGT asset from the land. These circumstances occur where certain balancing adjustment provisions apply to the building or structure. For example, a timber mill building is subject to a balancing charge adjustment if it is sold or destroyed, so it is treated as a separate asset from the land.

    Land you acquire on or after 20 September 1985 adjacent to land you acquired before that date is taken to be a separate CGT asset even if it and the adjacent land are merged into one title.

    Example
    Adjacent land

    On 1 April 1984 Dani bought a block of land. On 1 June 2000 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 capital gains tax.

    Last modified: 31 Aug 2010QC 16195