ATO Interpretative Decision
ATO ID 2003/627 (Withdrawn)
Income Tax
Capital gains tax: rollover - extension or renewal of crown leaseFOI status: may be released
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This ATO ID is withdrawn as it is a straightforward application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 3 November 2006
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer choose not to apply the roll-over in section 124-575 of the Income Tax Assessment Act 1997 (ITAA 1997) if the taxpayer holds a Crown lease over land and the lease expires and a new one is granted?
Decision
No. The replacement asset roll-over in section 124-575 of the ITAA 1997 applies automatically.
Facts
The taxpayer owned a Crown lease over land (the original lease).
On expiry of the original lease, the taxpayer exercised their right to renew the lease on the same terms for a further period. The new lease is over precisely the same land as the original lease.
The taxpayer sought to crystallise a capital loss on expiry of the original lease.
Reasons for Decision
Subdivision 124-J of the ITAA 1997 provides for replacement asset roll-over for the holder of rights under a Crown lease over land when the lease is renewed, extended or converted to an estate in fee simple.
Subsection 124-575(1) of the ITAA 1997 says there is a roll-over in this situation. The roll-over is automatic. It does not involve a choice by the taxpayer.
Roll-over means that any capital gain or capital loss made on the expiry of the original lease is disregarded (subsection 124-15(2) of the ITAA 1997). Essentially the gain or loss is deferred until the expiry of the new lease.
Accordingly, the capital loss made by the taxpayer on expiry of the original lease is disregarded. The taxpayer cannot choose to have regard to the loss at this time.
Date of decision: 23 June 2003Year of income: Year ending 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
Subdivision 124-J
subsection 124-15(2)
section 124-575
subsection 124-575(1)
Keywords
Capital gains tax
CGT roll-over relief
CGT replacement asset roll-over
Crown leases
ISSN: 1445-2782
| Date: | Version: | |
| 23 June 2003 | Original statement | |
| You are here → | 3 November 2006 | Archived |