Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_14:p20
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 14 (pt 20/40)
Character Range: 83832–86323

event F1 happens if a lessor grants, renews or extends a lease.

Note 1: Other CGT events can apply to leases. An assignment of a lease is an example of CGT event A1.

Note 2: There are special rules that apply to some lease transactions: see Division 132.

 (2) The time of the event is:

 (a) for the grant of a lease:

 (i) when the contract for the lease is entered into; or

 (ii) if there is no contract—at the start of the lease; or

 (b) for a renewal or extension—at the start of the renewal or extension.

 (3) The lessor makes a capital gain if the *capital proceeds from the grant, renewal or extension are more than the expenditure it incurred on the grant, renewal or extension. It makes a capital loss if those *capital proceeds are less.

 (4) The expenditure can include giving property: see section 103‑5. However, it does not include an amount you have received as *recoupment of it and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct it.

Exception

 (5) The lessor can choose to apply section 104‑115 to certain long term leases. If it does so, this section does not apply.

104‑115  Granting a long‑term lease: CGT event F2

 (1) CGT event F2 happens if:

 (a) a lessor grants a lease over land (whether or not the lessor owns an estate in fee simple in the land), or renews or extends a lease over land; and

 (b) the lease, renewal or extension is for at least 50 years and:

 (i) at the time of the grant, renewal or extension, it was reasonable to expect that it would continue for at least 50 years; and

 (ii) the terms of the lease, renewal or extension as they apply to the lessee are substantially the same as those under which the lessor owned the land; and

 (c) the lessor chooses to apply this section instead of section 104‑110.

Note: Section 103‑25 tells you when the choice must be made.

 (2) The time of the event is when the lessor grants the lease, or at the start of the renewal or extension, as appropriate.

 (3) The lessor makes a capital gain if the *capital proceeds from the event are more than the *cost base of the lessor's interest in the land. The lessor makes a capital loss if those *capital proceeds are less than the *reduced cost base of that interest.

Exceptions

 (4) A *capital gain or *capital loss the lessor makes is disregarded if:

 (a) it *acquired the *CGT asset that is the land, or the lease to the lessor was granted, before 20