Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p11
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 11/12)
Character Range: 1953264–1955896

you use for pastoral operations. You build some fences that are destroyed by fire. The fences are depreciating assets and are subject to a balancing adjustment on their destruction under Division 40. The fences are taken to be a separate CGT asset from the land.

Unrelated improvements to pre‑CGT assets
 (2) A capital improvement to a *CGT asset (the original asset) that you *acquired before 20 September 1985 (that is not related to any other capital improvement to the asset) is taken to be a separate *CGT asset if its *cost base (assuming it were a separate CGT asset) when a CGT event happens (except one that happens because of your death) in relation to the original asset is:
 (a) more than the *improvement threshold for the income year in which the event happened; and
 (b) more than 5% of the *capital proceeds from the event.
Example: In 1983 you bought a boat. In 1999 you install a new mast (a capital improvement) for $30,000. Later, you sell the boat for $150,000.
 If the cost base of the improvement in the sale year is $41,000 and the improvement threshold for that year is $96,000, the improvement will not be treated as a separate asset.
Note 1: Section 108‑80 sets out the factors for deciding whether capital improvements are related to each other.
Note 2: If the improvement is a separate asset, the capital proceeds from the event must be apportioned between the original asset and the improvement: see section 116‑40.

Related improvements to pre‑CGT assets
 (3) Capital improvements to a *CGT asset (the original asset) that you *acquired before 20 September 1985 that are related to each other are taken to be a separate *CGT asset if the total of their *cost bases (assuming each one were a separate CGT asset) when a *CGT event happens in relation to the original asset is:
 (a) more than the *improvement threshold for the income year in which the event happened; and
 (b) more than 5% of the *capital proceeds from the event.
Note: If the improvements are a separate asset, the capital proceeds from the event must be apportioned between the original asset and the improvements: see section 116‑40.

Some improvements not relevant
 (4) This section does not apply to a capital improvement:
 (a) that took place under a contract that you entered into before 20 September 1985; or
 (b) if there is no contract—that started or occurred before that day.
 (5) Subsections (2) and (3) do not apply if the capital improvement is made to:
 (a) a *Crown lease; or
 (b) a *prospecting entitlement or *mining entitlement; or
 (c) a *statutory licence; or
 (d) a *depreciating asset to which Subdivision 124‑K