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INCOME TAX ASSESSMENT ACT 1997 - SECT 112.30 Apportionment rules

INCOME TAX ASSESSMENT ACT 1997 - SECT 112.30

Apportionment rules

Apportionment on acquisition of an asset

  (1)   If you * acquire a * CGT asset because of a transaction and only part of the expenditure you incurred under the transaction relates to the acquisition of the asset, the first element of your * cost base and * reduced cost base of the asset is that part of the expenditure that is reasonably attributable to the acquisition of the asset.

    The expenditure can 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:

Start formula Cost base of the asset times start fraction Capital proceeds for the CGT event happening to the part over Those capital proceeds plus the market value of the remainder of the asset end fraction end 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:

Start formula $24,000 times start fraction $9,000 over $9,000 plus $16,000 end fraction equals $8,640 end formula

  Under subsection   (4), the cost base of the remainder of the truck is:

Start formula $24,000 minus $8,640 equals $15,360 end formula

  (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.

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