Document ID: chunk:federal_register_of_legislation:C2004A00901:clause:7_7
Version: federal_register_of_legislation:C2004A00901
Segment Type: clause
Provision Reference: sch 7 cl 7
Character Range: 50856–52847

7  After section 104‑45
Insert:

104‑47  Conservation covenants: CGT event D4

 (1) CGT event D4 happens if you enter into a *conservation covenant over land you own.

 (2) The time of the event is when you enter into the covenant.

 (3) You make a *capital gain if the *capital proceeds from entering into the covenant are more than that part of the *cost base of the land that is apportioned to the covenant. You make a *capital loss if those capital proceeds are less than the part of the *reduced cost base of the land that is apportioned to the covenant.

Note: The capital proceeds from entering into the covenant are modified if you do not receive anything for entering into the covenant: see section 116‑105.

 (4) The part of the *cost base of the land that is apportioned to the covenant is worked out in this way:
The part of the *reduced cost base of the land that is apportioned to the covenant is worked out similarly.

 (5) The *cost base and *reduced cost base of the land are reduced by the part of the cost base or reduced cost base of the land that is apportioned to the covenant.

Example: Lisa receives $10,000 for entering into a conservation covenant that covers 15% of the land she owns. Lisa uses the following figures in calculating the cost base of the land that is apportioned to the covenant:

 The cost base of the entire land is $200,000.

 The market value of the entire land before entering into the covenant is $300,000, and its market value after entering into the covenant is $285,000.

 Lisa calculates the cost base of the land that is apportioned to the covenant to be:

Exceptions

 (6) *CGT event D4 does not happen if:
 (a) you did not receive any *capital proceeds for entering into the covenant; and
 (b) you cannot deduct an amount under Division 31 for entering into the covenant.

Note: In this case, CGT event D1 will apply.

 (7) A *capital gain or *capital loss you make is disregarded if you *acquired the land before 20 September 1985.