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Taxation Determination

TD 93/181

Income tax: capital gains: a building acquired pre-CGT is relocated to land acquired post-CGT. Can the relocation costs be included in the cost base of the post-CGT land?

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FOI status:

may be releasedFOI number: I 1216135

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. Yes. Relocation costs are generally considered to be capital expenditure incurred for the purposes of enhancing the value of the post-CGT land.

2. For expenditure to form part of the cost base, paragraph 160ZH(1)(c) of the Income Tax Assessment Act 1936 requires the following two conditions to be met :

(i)
the expenditure must enhance the value of the asset; and
(ii)
the expenditure must be reflected in the state or nature of the asset at the time of disposal.

3. If both conditions are met, the relocation costs may be included in the cost base of the post-CGT land.

4. Relocation costs may include costs associated with construction (see TD 93/184) in addition to such costs as professional fees and other charges.

Commissioner of Taxation
9/9/93

Previously issued as Draft TD 93/D76

References

ATO references:
NO TD/92/0028/PAR (CGTDET 59)

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/180
TD 93/182
TD 93/183
TD 93/184

Subject References:
Building relocated to post-CGT land
capital expenditure
cost base
relocation costs

Legislative References:
ITAA 160ZH(1)(c)

TD 93/181 history
  Date: Version: Change:
You are here 9 September 1993 Original ruling  
  8 September 2010 Withdrawn  

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