Chartered Accountants

Latest News

Intangible capital improvements made to a pre-CGT asset

The Australian Taxation Office has issued an opinion regarding “parts” of an asset which many advisers consider controversial. 

 

 

It provides that for the purposes of the “separate asset” rules, some intangible capital improvements can be considered separate capital gains tax (CGT) assets from the pre-CGT asset to which the improvements are made.  This applies if the improvement cost base is more than the improvement threshold for the income year when CGT event happened, and it is more than 5% of the capital proceeds from the event.

This can result in part of the sale of pre CGT asset being fully taxable (with no 50% discount).  Hence, extra care is required when selling.

An example could be the sale under a single contract of an operating hotel where the freehold was acquired prior to 1985, but (arguably) the goodwill is generated after.

 

 

AcctWeb

Latest Accounting News

  • FBT Reminder – Odometer Reading

    Anybody who has a Fringe Benefits Tax obligation should take an odometer reading of motor vehicles.

  • ATO’s debts on hold campaign prompts new IGTO guidance

    New guidance has been released on best practice principles for debt notifications in response to the re-activation of old debts by the ATO.

  • Small business benchmarks

    The ATO has developed quite a number of benchmarks to help small businesses develop an idea of their performance compared to similar businesses in the same industry.

  • The 2025 Financial Year tax & super changes you need to know!

    The new financial year is fast approaching and so are a number of changes to superannuation contribution amounts and the individual tax rates. These changes are outlined below, as is some information on how you may be able to work with these changes when managing your tax affairs during 2024-25.