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Edited version of private advice
Authorisation Number: 1052239637333
Date of advice: 10 April 2024
Ruling
Subject: Capital gains tax
Question 1
Will the sale of a leasehold on a telecommunications mobile phone tower to a third party be considered a capital gains tax (CGT) event A1 under Division 104 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Division 104 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the sale of a leasehold on a telecommunications mobile phone tower to a third party will be considered a capital gains tax (CGT) event A1.
Question 2
Will the cost base for this event be the purchase price plus additional costs associated with acquiring, holding and disposing of the asset (provided you have not previously already claimed the additional costs)?
Answer
Yes.
Provided that the additional costs associated with acquiring, holding and disposing of the asset have not already been claimed previously, they will form the cost base for the asset together with the purchase price.
Question 3
Are you entitled to a 50% CGT discount under Division 115 of the ITAA 1997?
Answer
Yes.
Division 115 of the ITAA 1997 allows for a 50% CGT discount on the sale of the asset.
This ruling applies for the following period:
Year ending XX XX 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You and entity A hold a lease agreement on a telecommunications mobile phone tower.
The lease commenced in 20XX and will end in 20XX.
The lease has been held for more than 12 months.
The lease payments are paid yearly, with the latest payment of $XX received by you on XX XX 20XX.
Prior to this, lease payments were less per year than the most recent amount.
The tower is located at your residential property.
The tower is not attached to or part of a building. It is freestanding on your property.
You are under negotiations to sell under a Deed of Sale the remaining terms of your leasehold that ends in 20XX to entity B.
The sale price of the leasehold will be approximately $XX plus selling costs up to $XX.
No land will be exchanged in this transaction.
Once the sale is completed, entity A will make future lease payments to entity B.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 104
Income Tax Assessment Act 1997 Division 115