Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_5:p2
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 5 (pt 2/3)
Character Range: 135174–137854

destroyed by fire. The fences are plant and are subject to a balancing adjustment on their destruction under Division 42. 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 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) *plant to which Subdivision 124‑K applies.

Note: Section 108‑75 deals with this situation.

 (6) This section does not apply to a capital improvement consisting of repairs to