Commonwealth Consolidated Acts

[Index] [Table] [Search] [Search this Act] [Notes] [Noteup] [Previous] [Next] [Download] [Help]

INCOME TAX ASSESSMENT ACT 1997 - SECT 104.125

Lessee receives payment for changing lease: CGT event F4

             (1)  CGT event F4 happens if a lessee receives a payment from the lessor for agreeing to vary or waive a term of the lease.

                   The payment can include giving property: see section 103-5.

             (2)  The time of the event is when the term is varied or waived.

             (3)  The lessee makes a capital gain if the * capital proceeds from the event are more than the lease's * cost base (at the time of the event). If the lessee makes a * capital gain, the lease's cost base is also reduced to nil.

Note:          The lessee cannot make a capital loss.

             (4)  On the other hand, if those * capital proceeds are less , the lease's * cost base is reduced by that amount at the time of the event.

Example:    On 1 January 1999 a lessee enters a lease. On 1 May 1999 the lessee agrees to waive a term. The lessor pays the lessee $1,000 for this.

                   If the lease's cost base at the time of the waiver is $2,500, it is reduced from $2,500 to $1,500.

                   On 1 September 1999 the lessee agrees to waive another term. The lessor pays the lessee $2,000 for this.

                   If the lease's cost base at the time of the waiver is $1,500, the lessee makes a capital gain of $500, and the cost base is reduced to nil.

Exceptions

             (5)  A * capital gain the lessee makes is disregarded if:

                     (a)  the lease was granted before 20 September 1985; or

                     (b)  for a lease that has been renewed or extended--the start of the last renewal or extension occurred before that day.



AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback