Taxation Determination TD 2022/14
Date of effect: 5 October 2022





Appendix: 4. In principle, an item of expenditure should either be deductible for income tax purposes or included in the cost base of an underlying asset for CGT purposes, but not both. [2] 5. Consistently with that principle, for CGT assets acquired after 7:30 pm ACST on 13 May 1997, where you claim a deduction for expenditure, subsection 110-45(2) applies to exclude the expenditure from the CGT asset's cost base: 6. The context in which the word 'expenditure' operates in subsection 110-45(2) is one of deductibility. A non-contingent liability to pay a specified amount [3] is a presently-existing liability to expenditure, even if the liability is yet to be discharged. If the non-contingent liability can be included in cost base under subsection 110-25(2) or section 112-35, and you have deducted or can deduct an amount of expenditure which it represents, then subsection 110-45(2) operates such that the amount included in cost base at the time of acquisition of the asset will not form part of the cost base, provided it does not fall under one of the listed exceptions. 7. Consequently, subsection 110-45(2) can apply to reduce the amount included in the cost base by subsection 110-25(2) or by section 112-35. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously released in draft form as TD 2019/D11


If this Determination applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Determination. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Determination. | Ruling: 1. Yes, subsection 110-45(2) of the Income Tax Assessment Act 1997 applies such that the amount does not form part of the cost base of your CGT asset. [1] | 2. All legislative references in this Determination are to the Income Tax Assessment Act 1997. | Date of effect: 3. This Determination applies both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 to 76 of Taxation Ruling TR 2006/10 Public Rulings). | Commissioner of Taxation 5 October 2022


Related rulings: TR 2006/10
Legislative references: ITAA 1997 110-25(2) ITAA 1997 110-45(2) ITAA 1997 112-35
Other references: Explanatory Memorandum to the Taxation Laws Amendment Bill (No 2) 1998