Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 110 - Cost base and reduced cost base  

Subdivision 110-A - Cost base  

What does not form part of the cost base

SECTION 110-50   Partnership interests acquired after 7.30 pm on 13 May 1997  

110-50(1)  

This section prevents some expenditure from forming part of the *cost base, or of an element of the cost base, of your interest in a *CGT asset of a partnership if you *acquired the interest after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. (The expenditure mentioned in this section can include giving property: see section 103-5 .)

For exceptions to the application of this section, see section 110-53 .

110-50(1A)  

This section also applies to expenditure incurred after 30 June 1999 on land or a building if:

(a) the land or building was *acquired at or before the time mentioned in subsection (1); and

(b) the expenditure forms part of the fourth element of the *cost base of the land or building.

Deductible expenditure excluded from second and third elements

110-50(1B)  

Expenditure does not form part of the second or third element of the cost base to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct it. Other deductible expenditure

110-50(2)  

Expenditure (except expenditure excluded by subsection (1B) does not form part of the cost base to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct it for an income year, except so far as:

(a) the deduction has been reversed by an amount being included in your assessable income for an income year, or in the assessable income of a partnership in which you are or were a partner, by a provision of this Act (outside this Part and Part 3-3 and Division 243 ); or

Note:

Division 20 contains some of the provisions that reverse deductions. Section 20-5 lists some others.

(ab) the deduction is under Division 243 ; or

(b) the deduction would have been so reversed apart from a provision listed in the table in subsection 110-45(2) (relief from including a balancing charge in your assessable income).

Recouped expenditure

110-50(3)  

Expenditure does not form part of any element of the cost base to the extent of any amount that you, or a partnership in which you are or were a partner, have received as *recoupment of it, except so far as the amount is included in your assessable income or the partnership's assessable income.

110-50(3A)  

(Repealed by No 95 of 2004) Capital expenditure by previous owner of the asset

110-50(4)  
The cost base is reduced to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct for an income year capital expenditure incurred by another entity in respect of the *CGT asset. (This rule does not apply so far as the deduction is covered by paragraph (2)(a) or (b).)

Example:

Under Division 43 an entity can deduct expenditure incurred by a previous owner of capital works that the entity owns.

Landcare and water facility expenditure giving rise to a tax offset

110-50(5)  

Expenditure does not form part of the cost base to the extent that you choose a *tax offset for it under the former section 388-55 (about the landcare and water facility tax offset) instead of deducting it. Heritage conservation expenditure giving rise to a tax offset

110-50(6)  
Expenditure does not form part of the cost base to the extent that:

(a) it is eligible heritage conservation expenditure (as determined under former section 159UO of the Income Tax Assessment Act 1936 ); and

(b) you, or a partnership in which you are or were a partner, could have deducted it for an income year under any of these Divisions (about capital works):

(i) Division 43 of this Act;

(ii) former Division 10C or 10D of Part III of that Act;

but for the exclusions in paragraph 43-70(2)(h) of this Act and former subsections 124ZB(4) and 124ZG(5) of that Act.

Note:

Because eligible heritage conservation expenditure is the subject of a tax offset, it is also not deductible.