Draft Taxation Determination
TD 93/D134
Income tax: capital gains: does New Zealand Goods and Services Tax (GST) incurred by an Australian taxpayer on the acquisition of a New Zealand property form part of the cost base of that property?
-
Please note that the PDF version is the authorised version of this draft ruling.This document has been Withdrawn.View the Withdrawal notice for this document.
FOI status:
draft only - for commentPreamble
Draft Taxation Determinations (TDs) represent the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO. |
1. Yes. Under the provisions of section 160ZH of the Income Tax Assessment Act 1936, the cost base of an asset includes the amount of incidental costs incurred by a taxpayer in the acquisition of an asset. Incidental costs, as defined in paragraph 160ZH(5)(b), cover costs of transfer. New Zealand GST is considered to be a cost of transfer.
2. Under the New Zealand GST legislation, the purchaser of any property in New Zealand becomes liable for the GST on settlement. At the time of settlement, the purchaser pays the GST to the seller who then pays it to the New Zealand Inland Revenue.
Example
ABC Pty Ltd, an Australian company, buys a property in New Zealand for $500,000. It pays New Zealand GST of $62,500 to the seller and incurs other incidental costs of $20,000.
The cost base includes the following amounts:-
Purchase price | $500,000 |
GST | $ 62,500 |
Other costs | $ 20,000 |
Cost base | $582,500 |
Commissioner of Taxation
3 June 1993
References
ATO references:
NO
BO A&R MELB (CGTDET 65)
Subject References:
Cost base
Goods and Services Tax
GST
New Zealand property
Legislative References:
ITAA 160ZH(1)
ITAA 160ZH(5)