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ATO Interpretative Decision

ATO ID 2003/356 (Withdrawn)

Income Tax
Capital gains tax: CGT event B1

Attention This ATO ID is withdrawn. This ATO ID is a straight application of the law and guidance relating to this issue can be found on ato.gov.au within the Guide to capital gains tax 2017 (QC 51236).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 22 September 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Does CGT event B1 in section 104-15 of the Income Tax Assessment Act 1997 (ITAA 1997) happen to a lessor under a lease agreement for land if, under another agreement, the land may pass to the lessee at or before the end of the lease agreement?


No. CGT event B1 in section 104-15 of the ITAA 1997 will not happen in these circumstances.


The taxpayer (lessor) entered into a lease agreement over land with another entity (lessee). The taxpayer also entered into a loan agreement with the same entity.

Under the loan agreement the other entity will be able to take ownership of the land if the lease is terminated due to a breach of the lease agreement by the lessor or because the loan is not repaid by the lessor at the end of the loan term.

The lease agreement and the loan agreement are two separate independent agreements.

Reasons for Decision

Subsection 104-15(1) of ITAA 1997 provides:

   CGT event B1 happens if you enter into an agreement with another entity under which:

 the right to the use and enjoyment of a CGT asset you own passes to the other entity; and
 title in the asset will or may pass to the other entity at or before the end of the agreement.

The provision contemplates the existence of only one agreement for it to operate. If under the same agreement the right to the use and enjoyment of the asset passes to another entity and title in the asset will or may pass to the same entity at or before the end of that agreement, CGT event B1 is triggered.

CGT event B1 will not happen in this case, because the agreement by which the entity obtained use and enjoyment of the land (the lease agreement) is not the agreement by which title in the land may pass to that entity (the loan agreement).

Amendment History

Date of Amendment Part Comment
7 March 2016 Facts & Reasons for Decision Updated to improve clarity.

Date of decision: 3 April 2003

Year of income:Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   section 104-15
   subsection 104-15(1)

Related Public Rulings (including Determinations)
Taxation Ruling TR 94/29
Taxation Determination TD 1999/78

Siebel/TDMS Reference Number: 3168364; 1-7O49UMJ

Business Line: Individuals

Date of publication: 15 May 2003

ISSN: 1445-2782

ATOID 03-356 history   Top  
   Date   Version 
    3 April 2003   Original statement   
    7 March 2016   Updated statement   
 You are here ®  22 September 2017   Withdrawn   


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