Commonwealth Consolidated Acts Commonwealth Consolidated Acts(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:
She reduces the cost base of the land by the part that is apportioned to the covenant:
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.
Table of sections
104-55 Creating a trust over a CGT asset: CGT event E1
104-60 Transferring a CGT asset to a trust: CGT event E2
104-65 Converting a trust to a unit trust: CGT event E3
104-70 Capital payment for trust interest: CGT event E4
104-71 Adjustment of non-assessable part
104-72 Reducing your capital gain under CGT event E4 if you are a trustee
104-75 Beneficiary becoming entitled to a trust asset: CGT event E5
104-80 Disposal to beneficiary to end income right: CGT event E6
104-85 Disposal to beneficiary to end capital interest: CGT event E7
104-90 Disposal by beneficiary of capital interest: CGT event E8
104-95 Making a capital gain
104-100 Making a capital loss
104-105 Creating a trust over future property: CGT event E9