Private ruling: capital gains tax
Published: October 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Do the travel costs associated with the sale of your property form part of the second element of cost base for capital gains tax (CGT) purposes under section 110-35 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: Your principal place of residence was rented out and later you again treated it as your principal place of residence when the lease expired. You moved into a new residence in anticipation of the sale of the original property and incurred costs when you travelled from your new residence to see the real estate and settlement agents, hand over keys, drop off and sign documentation in relation to the sale of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 110-25 | Income Tax Assessment Act 1997 section 110-35

Reasons for decision: Summary: Subsection 110-25(3) of the ITAA 1997 state the second element of the cost base is the incidental costs that the taxpayer incurs in acquiring the asset or which relate to a CGT event that happens in relation to the asset. Incidental costs that can be included in the cost base of a CGT asset are set out in section 110-35 of the ITAA 1997 and include such items as the costs for: services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal advisor, transfer, stamp duty or other similar duty, advertising or marketing to find a seller or buyer, relating to the making of any valuation or apportionment to determine your capital gain or loss, search fees relating to a CGT asset, a conveyancing kit and; borrowing expenses. Travel costs are not identified as incidental costs as outlined under subsection 110-25(3) of the ITAA 1997 therefore they do not form part of the cost base when calculating the CGT for the sale of your property.