Private ruling: Capital gains tax
Date of advice: 11 August 2016
Published: September 2016
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you include the cost of travel expenses incurred in visiting your solicitors and Barristers in relation to defending your ownership of the rental property in the cost base? | A1: Yes.

Relevant facts and circumstances: You purchased a residential property sometime after 20 September 1985.This property has since been used to produce income. During a period of time you were involved in multiple court cases in regards to defending your ownership of the property. You advised that the other party involved lost every case. You incurred travelling expenses to and from solicitors and barristers as a result of the court cases.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 110-25(6)

Reasons for decision: Summary: Subsection 110-25(6) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that capital expenditure you incur to establish, preserve or defend your title to the asset or a right over the asset will form the fifth element of the cost base. The costs of obtaining legal advice relating to defending your title or right to an asset will generally fall within the fifth element of the asset's cost base. These costs will include travel expenses you incurred travelling to a solicitor or a legal representative. In your case, you have incurred travel expenses when you needed to visit your solicitor and barrister. These costs were incurred in defending your ownership rights to the property. Accordingly, you are entitled to include this expense in the fifth element of the property's cost base.