Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 110 - Cost base and reduced cost base  

Subdivision 110-A - Cost base  

What does not form part of the cost base

SECTION 110-45   Assets acquired after 7.30 pm on 13 May 1997  

110-45(1)    

This section prevents some expenditure from forming part of the *cost base, or of an element of the cost base, of a *CGT asset *acquired after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. (The expenditure mentioned in this section can include giving property: see section 103-5 .)

For the cost base of interests in partnership assets acquired after that time, see section 110-50 .

For exceptions to the application of this section, see section 110-53 .

110-45(1A)    

This section also applies to expenditure incurred after 30 June 1999 on land or a building if:

(a) the land or building was *acquired at or before the time mentioned in subsection (1); and

(b) the expenditure forms part of the fourth element of the *cost base of the land or building.

Deductible expenditure excluded from second and third elements

110-45(1B)    
Expenditure does not form part of the second or third element of the cost base to the extent that you have deducted or can deduct it.

Other deductible expenditure

110-45(2)    

Expenditure (except expenditure excluded by subsection (1B)) does not form part of the cost base to the extent that you have deducted or can deduct it for an income year, except so far as:

(a) the deduction has been reversed by an amount being included in your assessable income for an income year by a provision of this Act (outside this Part and Part 3-3 and Division 243 ); or

Note:

Division 20 contains some of the provisions that reverse deductions. Section 20-5 lists some others.

(ab) the deduction is under Division 243 ; or

(b) the deduction would have been so reversed apart from a provision listed in the table (relief from including a balancing charge in your assessable income).

Provisions for relief from including a balancing charge in your assessable income
Item	Provision	Subject matter
1	section 40-340	Roll-over relief for *depreciating asset
.
2	section 40-365	Involuntary disposal of *depreciating asset
.
3	(Repealed by No 93 of 2011)

Recouped expenditure

110-45(3)    

Expenditure does not form part of any element of the cost base to the extent of any amount you have received as *recoupment of it, except so far as the amount is included in your assessable income.

110-45(3A)    
(Repealed by No 95 of 2004)

Capital expenditure by previous owner that you can deduct after acquisition

110-45(4)    
The cost base is reduced to the extent that you have deducted or can deduct for an income year capital expenditure incurred by another entity in respect of the *CGT asset. (This rule does not apply so far as the deduction is covered by paragraph (2)(a) or (b).)

Example:

Under Division 43 you can deduct expenditure incurred by a previous owner of capital works you own.

Landcare and water facility expenditure giving rise to a tax offset

110-45(5)    

Expenditure does not form part of the cost base to the extent that you choose a *tax offset for it under the former section 388-55 (about the landcare and water facility tax offset) instead of deducting it.

Heritage conservation expenditure giving rise to a tax offset

110-45(6)    
Expenditure does not form part of the cost base to the extent that:

(a) it is eligible heritage conservation expenditure (as determined under former section 159UO of the Income Tax Assessment Act 1936 ); and

(b) you could have deducted it for an income year under any of these Divisions (about capital works):

(i) Division 43 of this Act;

(ii) former Division 10C or 10D of Part III of that Act;

but for the exclusions in paragraph 43-70(2)(h) of this Act and former subsections 124ZB(4) and 124ZG(5) of that Act.

Note:

Because eligible heritage conservation expenditure is the subject of a tax offset, it is also not deductible.