Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section is relevant only if a * CGT event happens in relation to a * CGT asset that is:
(a) a * Crown lease; or
(b) a * prospecting entitlement or * mining entitlement; or
(c) a * statutory licence; or
(d) a * depreciating asset to which Subdivision 124 - K applies.
You must have * acquired it before 20 September 1985.
Note: Division 124 treats you as having acquired a CGT asset before that day in some situations.
(2) There are possible consequences if there has been one or more capital improvements to:
(a) the * CGT asset the subject of the * CGT event; or
(b) any * CGT assets of the same kind that were in existence before the CGT asset and came to an end where a roll - over was obtained under a provision set out in this table:
Roll - over provisions | ||
|
| |
1 | A * Crown lease | Subdivision 124 - J |
2 | A prospecting or mining entitlement | Subdivision 124 - L |
3 | Subdivision 124 - C or former Subdivision 124 - O | |
4 | A * depreciating asset | Subdivision 124 - K |
Note: Roll - overs under former sections 160ZWA, 160ZZF, 160ZZPE and 160ZWC of the Income Tax Assessment Act 1936 are also relevant: see section 108 - 75 of the Income Tax (Transitional Provisions) Act 1997 .
Example: In 1984 you acquired a commercial fishing licence. In 1986 you paid $62,000 to get an extra right (a capital improvement) attached to the licence.
In June 1999 the licence expired and you got a new licence. You obtained a roll - over for the old licence expiring. In April 2000 you sold the new fishing licence for $200,000.
(3) Any capital improvement that is not related to another capital improvement is taken to be a separate * CGT asset if its * cost base (assuming it were a separate CGT asset) when the * CGT event happens is:
(a) more than the * improvement threshold for the income year in which the event happened; and
(b) more than 5% of the * capital proceeds from the event.
Example: To continue the example, suppose the cost base of the right is $101,000 and the improvement threshold for the 1999 - 2000 income year is $96,000.
Since the cost base of the right is more than the improvement threshold and more than 5% of the capital proceeds, the right is taken to be a separate CGT asset.
Note 1: Section 108 - 80 sets out the factors for deciding whether capital improvements are related to each other.
Note 2: If the improvement is a separate asset, the capital proceeds from the event must be apportioned between the asset and the improvement: see section 116 - 40.
(4) Any capital improvements that are related to each other are taken to be a separate * CGT asset if the total of their * cost bases (assuming each one were a separate CGT asset) when the * CGT event happens is:
(a) more than the * improvement threshold for the income year in which the event happened; and
(b) more than 5% of the * capital proceeds from the event.
Note: If the improvements are a separate asset, the capital proceeds from the event must be apportioned between the asset and the improvements: see section 116 - 40.
(5) This section does not apply to any capital improvement:
(a) that took place under a contract that you entered into before 20 September 1985; or
(b) if there is no contract--that started or occurred before that day.