ATO Interpretative Decision
ATO ID 2001/614 (Withdrawn)
Income Tax
Deductibility of stamp duty and transfer expenses with regard to a crown leaseFOI status: may be released
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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the taxpayer entitled to a deduction under section 25-20 of the Income Tax Assessment Act 1997 (ITAA 1997) for the stamp duty and registration of transfer expenses incurred in acquiring a crown lease for a property which is partly used for income producing purposes?
Decision
Yes, the taxpayer is entitled to a partial deduction under section 25-20 of the ITAA 1997 for the stamp duty and registration of transfer expenses incurred in acquiring a crown lease to the extent that the property is income producing.
Facts
The taxpayer acquired a leasehold property.
The property is held under a crown lease with a term of 99 years.
Half of the property is held by the taxpayer as a rental property and is used to produce assessable income.
The taxpayer lives in the other half of the property.
Stamp duty and registration of transfer costs were incurred by the taxpayer in acquiring the leasehold property.
Reasons for Decision
Subsection 25-20(1) of the ITAA 1997 provides that a deduction is allowable for the costs of preparing, registering or stamping a lease of a property where the property is used solely for the purpose of producing assessable income.
A portion of the lease expenditure is an allowable deduction under subsection 25-20(2) of the ITAA 1997 if the leasehold property is used partly for income producing purposes in the income year.
Although the term 'lease' is not defined in the ITAA 1997, the general law requirement is that a lease must be granted for a definite period. A crown lease with a term of 99 years is a 'lease' for the purposes of section 25-20 of the ITAA 1997.
As only half of the property is used for income producing purposes the taxpayer is entitled to a deduction for 50% of the stamp duty and registration of transfer costs incurred with regard to acquiring the crown lease.
Date of decision: 9 July 2001
Legislative References:
Income Tax Assessment Act 1997
section 25-20
subsection 25-20(1)
subsection 25-20(2)
Keywords
Leasehold
Stamp duties
Crown leases
Rental property
Rental expenses
ISSN: 1445-2782
| Date: | Version: | |
| 9 July 2001 | Original statement | |
| You are here | 6 June 2008 | Archived |