Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section prevents some expenditure from forming part of the * cost base, or of an element of the cost base, of your interest in a * CGT asset of a partnership if you * acquired the interest 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 exceptions to the application of this section, see section 110 - 53.
(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
(1B) Expenditure does not form part of the second or third element of the cost base to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct it.
Other deductible expenditure
(2) Expenditure (except expenditure excluded by subsection (1B) does not form part of the cost base to the extent that you, or a partnership in which you are or were a partner, 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, or in the assessable income of a partnership in which you are or were a partner, 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 in subsection 110 - 45(2) (relief from including a balancing charge in your assessable income).
Recouped expenditure
(3) Expenditure does not form part of any element of the cost base to the extent of any amount that you, or a partnership in which you are or were a partner, have received as * recoupment of it, except so far as the amount is included in your assessable income or the partnership's assessable income.
Capital expenditure by previous owner of the asset
(4) The cost base is reduced to the extent that you, or a partnership in which you are or were a partner, 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 an entity can deduct expenditure incurred by a previous owner of capital works that the entity owns.
Landcare and water facility expenditure giving rise to a tax offset
(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
(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, or a partnership in which you are or were a partner, 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.