CGT Determination Number 48

TD 48

Capital Gains: What are the CGT consequences where a lessee affixes to land an asset and the asset ceases to be owned by the lessee?

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FOI status:

1. When an asset owned by a lessee is affixed to land by the lessee, but the lessee is not regarded as continuing to own the asset, the owner of the land becomes the owner of the asset ( see CGT46 for circumstances where the lessee will be regarded as the owner).

2. In these circumstances, the lessee has disposed of the asset and the owner of the land has acquired it [paragraph 160M(2)(c)]. The time of acquisition and disposal will generally be when the asset is affixed to the land [subsection 160U(4)].

3. Where an amount is paid by the lessor to the lessee for the asset, that amount will generally be the consideration received by the lessee for the disposal and paid by the lessor for the acquisition. However, where no consideration or inadequate consideration (and the parties are not dealing at arm's length) is given, subsections 160ZD(2) and 160ZH(9) may apply to deem the market value of the asset to have been received and given.

4. An asset affixed to residential property may have been a non-listed personal-use asset of the lessee. If it is, sections 160ZE and 160ZG may apply if the consideration received for the asset and/or its cost base (or indexed cost base) are less than $5,000.

Commissioner of Taxation
5 March 1992

References

ATO references:
NO N.O.88/3728-7

Related Rulings/Determinations:

CGT46, now TD 46
CGT 47, now TD 47

Subject References:
Fixtures to land;
disposal and acquisition of an asset

Legislative References:
160ZD(2);
160ZH(9);
160ZE;
160ZG;
160M(2)(c);
160U(4)