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Edited version of your written advice
Authorisation Number: 1012713878201
Ruling
Subject: Expenses - administrator fees
Question
Will the administrator fees involved in the disposal of two investment properties be included under their respective cost bases?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You were placed into bankruptcy in the year ended 30 June 20XX.
The administrators have sold the remaining assets.
Substantial fees have been charged by the administrators for the management and disposal of the two investment properties.
You have asked the administrators to clearly identify the costs directly associated with the disposals of the properties.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1 and
Income Tax Assessment Act 1997 Division 110.
Reasons for decision
Subsection 110-25(3) of the Income Tax Assessment Act 1997 (ITAA 1997) state the second element of the cost base is the incidental costs that the taxpayer incurs in acquiring the asset or which relate to a CGT event that happens in relation to the asset.
Incidental costs that can be included in the cost base of a CGT asset are set out in section 110-35 of the ITAA 1997 and include the costs incurred for the services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal advisor.
In your case, you have incurred administrator's fees in the disposal of your investment properties. These fees are considered incidental costs that can be included in the second element of the asset's cost base.