Private ruling: Calculation of asset cost base
Date of advice: 5 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Can the maintenance costs be included in the cost base of your block of land purchased in August 20XX? | A1: Yes Costs associated with ownership (for example rates, land taxes, interest and repairs) can only be included in the cost base of assets acquired on or after 21 August 1991 where no deduction has or will be allowed for these costs. In your situation, as you purchased your block of land after 21 August 1991 and the maintenance costs are not deductible, you can include your maintenance costs when calculating the cost base of the land.

Relevant facts and circumstances: You purchased a block on land in August 20XX. You purchased this block of land with intention of building a dwelling on it and making this dwelling your main residence. The property required a retaining wall to be built on the block. You engaged two builders to complete this construction; however both of the contracts fell through as the builders were not able to obtain the building permit to build the wall. After losing a significant amount of money and the time it had taken to achieve zero results, you decided that you would sell the land. The land was contracted for sale in September 20XX. For the period of ownership you incurred expenses to maintain the land.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 110-25.