Private ruling: Capital gains tax - cost base
Published: August 2012
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to include an amount paid to an authority in your cost base when calculating your capital gains liability on the sale of your property? | A1: No.

Relevant facts and circumstances: You sold your investment property. An order was made that an amount from the sale was to be paid to an authority.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 110-25 | Income Tax Assessment Act 1997 section 110-55

Reasons for decision: Summary: Generally, the cost base and reduced cost base of an asset is made up of 5 elements (sections 110-25 and 110-55 of the Income Tax Assessment Act 1997 (ITAA 1997)). Briefly these are: Money you paid for the asset. Incidental costs of acquiring or selling the asset (for example agent's fees and stamp duty). Non capital costs associated with owning the asset. (Please note: you cannot include expenditure for which you have, or could have claimed as a deduction for income tax purposes in any year. You can only include these costs for assets that you acquired after 21 August 1991. You cannot include these costs to work out a capital loss). Capital costs associated with increasing the value of your asset. Capital costs to preserve or defend your title rights to your asset. In your case the amount which you were required to pay to an authority does not meet the criteria to be included in any elements of the cost base when calculating your capital gains liability.

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