On 25 January 2017, the Commissioner of Taxation (Commissioner) released Taxation Determination, TD 2017/1 (Determination) concerning whether intangible capital improvements made to a pre-CGT asset can be a separate asset for the purpose of subsections 108-70(2) or (3) of the Income Tax Assessment Act 1997.

In the Determination, the Commissioner states for the purposes of subsections 108-70(2) or (3), his view is intangible capital improvements can be a separate CGT asset from the pre-CGT asset to which those improvements are made if the relevant thresholds are satisfied.

On the same day the Determination was released, CGT Determination Number 5 concerning the question whether intangible improvements were caught by the subsection 160P(6) of the Income Tax Assessment Act 1936 to which subsections 108-70(2) and (3) correspond was withdrawn.

What is of particular interest in the Determination is the example raised by the Commissioner:

“A farmer, holding pre-CGT land, obtains council approval to rezone and subdivide the land.  Those improvements may be separate CGT assets from the land.”

The date of effect when the Determination is to apply is to years of income commencing both before and after its date of issue.

To discuss this further or for more information please contact:

Rob Jeremiah
Principal l Accredited Specialist in Tax and Business Law
Sladen Legal
M +61 418 500 363  l  T +61 3 9611 0103
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
rjeremiah@sladen.com.au

Sam Campbell
Associate / Business Law
Sladen Legal
M +61 423 515 454 | T +61 3 9611 0135
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
scampbell@sladen.com.au