Taxation Determination TD 98/24

TD 98/24ER - Notice of Erratum

Income tax: capital gains: what are the CGT consequences of a CGT event happening to post-CGT real property if the property comprises separate CGT assets under Subdivision 108-D in Part 3-1 of the Income Tax Assessment Act 1997 (the 1997 Act) or if the property is sold with depreciable assets?

FOI status:

May be released


At Paragraph 12

Omit paragraph 12 and insert new paragraph 12 as below:

'12. Correctly treating the plant as a separate asset from the land and building in accordance with the CGT provisions results in a net capital gain of $92,840 being:

Land and building Sale price - Cost base as indexed
$190,000 - ($70,000 x [say] 1.388) = $92,840
Plant Reduced cost base - Sale price
($25,000 - $15,000 ) - $10,000 = 0
Net capital gain = $92,840'

Note 1: The calculation of the reduced cost base of the plant in Example 1 (paragraph 12) in TD 98/24 is incorrect because it does not take into account the balancing adjustment of $6,000 deductible under subsections 42-195(1) and 42-195(2) of the Income Tax Assessment Act 1997 which, under subsection 110-55(4), is not included in the reduced cost base. The amount of $6000 is the difference between the undeducted cost of the plant of $16,000 (that is $25,000 less $9,000) and its termination value of $10,000 (assuming no sale expenses).

Note 2: The calculation of the capital gain in paragraph 13 of TD 98/24 needs to reflect the change made to the Income Tax Assessment Act 1997 by Act No 16 of 1999 to exclude deductible amounts from the cost base of a CGT asset.

Commissioner of Taxation
28 July 1999


ATO references:
NO NAT 99/4295-5; 98/6646-9

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 98/24