Draft Taxation Determination

TD 93/D76

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?

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 93/181.

FOI status:

Preamble

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

2. 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/D79) in addition to such costs as professional fees and other charges.

Commissioner of Taxation
1 April 1993

References

BO TD/92/0028/PAR (CGTDET 59)

Related Rulings/Determinations:

TD 93/D75
TD 93/D77
TD 93/D78
TD 93/D79

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

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