CGT Determination Number 12

TD 12

Capital Gains: What is the consideration for the acquisition of an asset purchased at the expiry of a lease agreement?

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FOI status:

may be releasedFOI number: I 1019020

It is accepted that in most cases the lessor and lessee will be dealing with each other at arm's length in connection with the acquisition.

2. This means that the consideration for the acquisition of the asset is the consideration actually given and not the market value of the asset, if that is different. That is, paragraph 160ZD(2)(c) does not apply.

Example:

A lessee purchased the leased asset for $20,000, being its residual value.

The lessee sold the asset six months later for $60,000.

The consideration for the acquisition of the leased asset is taken to be $20,000.

Commissioner of Taxation
10 September 1991

References

ATO references:
NO CGT Cell

Subject References:
Leased assets;
Consideration for acquisition