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ATO Interpretative Decision

ATO ID 2003/626 (Withdrawn)

Income Tax
Capital Gains Tax: relocating a pre-CGT building to post-CGT land

Attention This ATO ID is withdrawn. The view expressed in this ATO ID is current and is a straightforward expression of the operation of the law. Guidance on the view contained in this ATO ID can be found at Capital improvements and separate assets (QC 52203).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 6 October 2017.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.


Will a building acquired on or before 19 September 1985 and subsequently affixed to land acquired after that date be treated as a separate asset from the land for the purposes of Part 3-1 and 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997)?


No. Once affixed to the land, the building becomes part of the land. The exceptions to this principle in Subdivision 108-D of the ITAA 1997 do not apply.


A taxpayer purchased land prior to 20 September 1985. The land had a building affixed to it.

In the 1990-91 income year, the taxpayer removed the building from the land.

They then affixed the building to another piece of land acquired after 19 September 1985. They sold this land and building in the 2001-02 income year.

Reasons for decision

The land upon which the building was originally affixed was acquired before 20 September 1985. In other words, the land was a 'pre-CGT asset'. Therefore, any capital gain or capital loss arising from its disposal would be disregarded under Division 104 of the ITAA 1997.

The common law principle is that anything attached to land becomes part of the land. Therefore, the land and building was a single asset. Removing the building from the land split that asset into two pre-CGT assets - land and a building. This split did not cause a CGT event to happen (subsection 112-25(2) of the ITAA 1997).

The building was then affixed to another piece of land that was acquired after 19 September 1985. That is, the building was affixed to a 'post-CGT asset'.

Exceptions to the common law principle that anything attached to land becomes part of the land are set out in Subdivision 108-D of the ITAA 1997. In particular, section 108-55 sets out when a building is to be treated as a separate asset from land. Broadly, a building will be treated as a separate asset from the land to which it is affixed if the building is an asset for which a balancing adjustment must be worked out on sale or the building is post-CGT and the land to which it is affixed is pre-CGT. Neither exception applies in this case.

Therefore, the relocation of the building resulted in it becoming part of a 'post-CGT asset'. There is now a single 'post-CGT asset' that comprises both the land and the building. The cost base and reduced cost base of the building worked out under subsection 112-25(3) of the ITAA 1997 is added to the cost base and reduced cost base of the land (subsection 112-25(4)).

Accordingly, a single capital gain or capital loss must be calculated on the sale of the post-CGT land and building.

Date of decision: 8 July 2003

Year of income:Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Division 104
   Subdivision 108-D
   section 108-55
   subsection 112-25(2)
   subsection 112-25(3)
   subsection 112-25(4)

Related Public Rulings (including Determinations)
TD 93/180
TD 93/181
TD 93/182

Capital gains tax
CGT assets
CGT composite assets
CGT separate assets
Pre-CGT assets
CGT cost base modification rules
CGT cost base modification-split, changed or merged asset rule

Siebel/TDMS Reference Number: 3558861

Business Line: Small Business/Individual Taxpayers

Date of publication: 25 July 2003

ISSN: 1445-2782

ATO ID 2003 history   Top  
   Date   Version 
    8 July 2003   Original statement   
 You are here ®   6 October 2017   Withdrawn   


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