| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011717088806
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fac sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Capital gains tax - Cost base - Third element
Question: Can you include the council rates, repairs, maintenance and insurance costs in the cost base?
Answer: No.
This ruling applies for the following period:
Year ended 30 June 2010.
The scheme commences on:
1 July 2009.
Relevant facts and circumstances
You purchased a vacant block of land sometime after 20 September 1985 and prior to 20 August 1991. You built a house on the vacant block of land sometime after 20 August 1991.
You incurred council rates, repairs, maintenance and insurance costs during the period from when you first purchased the vacant block of land until a time prior to the property becoming income producing.
The property was first rented a few years after the dwelling was built on the property.
The property was sold some years after 1991.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 108-55
Income Tax Assessment Act 1997 Subsection 110-25(4)
Reasons for decision
The cost base of an asset includes five elements.
The third element of the cost base includes the cost of owning a CGT asset.
There are certain restrictions and conditions which must be satisfied for third element costs such as council rates, repairs, maintenance and insurance to be included.
The first requirement is that you must have acquired the asset after 20 August 1991.
In your case you acquired the asset (the vacant block of land on which you built the dwelling) prior to 20 August 1991, but after 20 September 1985, therefore you will not be able to include any third element costs in the cost base when working out your capital gain.
The third element of the cost base only applies to assets acquired after 20 August 1991, as this was the operative date of the amending legislation.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
