Document ID: chunk:federal_register_of_legislation:C2025C00029:section:7:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 7 (pt 2/5)
Character Range: 2038278–2040833

include giving property: see section 103‑5.

Apportionment of expenditure in other elements
 (1A) If you incur expenditure and only part of it relates to another element of the *cost base or *reduced cost base of a *CGT asset, that element includes that part of the expenditure that is reasonably attributable to that element.

Apportionment for CGT asset that was part of another asset
 (2) The *cost base and *reduced cost base of a *CGT asset is apportioned if a *CGT event happens to some part of the asset, but not to the remainder of it.
Note: The full list of CGT events is in section 104‑5.
 (3) The *cost base for the *CGT asset representing the part to which the *CGT event happened is worked out using the formula:
The *reduced cost base is worked out similarly.
 (4) The remainder of the *cost base and *reduced cost base of the asset is attributed to the part that remains.
Example: You acquire a truck for $24,000 and sell its motor for $9,000. Suppose the market value of the remainder of the truck is $16,000.
 Under subsection (3), the cost base of the motor is:
 Under subsection (4), the cost base of the remainder of the truck is:
 (5) However, an amount forming part of the *cost base or *reduced cost base of the asset is not apportioned if, on the facts, that amount is wholly attributable to the part to which the *CGT event happened or to the remaining part.

112‑35  Assumption of liability rule
  If you *acquire a *CGT asset from another entity that is subject to a liability, the first element of your *cost base and *reduced cost base of the asset includes the amount of the liability you assume.
Example: You acquire a block of land for $150,000. You pay $50,000 and assume a liability for an outstanding mortgage of $100,000. The first element of your cost base and reduced cost base is $150,000.
Note: The first element of cost base is dealt with in subsection 110‑25(2). The first element of reduced cost base is the same: see subsection 110‑55(2).

112‑36  Acquisitions of assets involving look‑through earnout rights

Consequences for cost base and reduced cost base
 (1) If you *acquire a *CGT asset because an entity *disposes of the CGT asset to you, and that disposal causes *CGT event A1 (the first CGT event) to happen:
 (a) neither the *cost base nor the *reduced cost base of the CGT asset includes the value of any *look‑through earnout right relating to the CGT asset and the acquisition; and
 (b) include in the first element of the CGT asset's cost base and reduced cost base any *financial benefit that you