INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 104 - CGT events  

Subdivision 104-F - Leases  

SECTION 104-130   Lessor receives payment for changing lease: CGT event F5  

104-130(1)  
CGT event F5 happens if a lessor receives a payment from the lessee for agreeing to vary or waive a term of the lease.

The payment can include giving property: see section 103-5 .

104-130(2)  
The time of the event is when the term is varied or waived.

104-130(3)  


The lessor makes a capital gain if the *capital proceeds from the event are more than the expenditure the lessor incurs in relation to the variation or waiver. The lessor makes a capital loss if those capital proceeds are less .
Example:

You own a shopping centre. The lessee of a shop in the centre pays you $10,000 for agreeing to change the terms of its lease. You incur expenses of $1,000 for a solicitor and $500 for a valuer. You make a capital gain of $8,500.

104-130(4)  
The expenditure can include giving property: see section 103-5 . However, it does not include an amount you have received as *recoupment of it and that is not included in your assessable income. Exceptions

104-130(5)  
A *capital gain or *capital loss the lessor makes is disregarded if:


(a) the lease was granted before 20 September 1985; or


(b) for a lease that has been renewed or extended - the start of the last renewal or extension occurred before that day.


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