Capital Gains Tax: improvement threshold for 2013/14

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CGT improvement threshold for 2013/14

Are you?
  • A taxpayer who has made major capital improvements to a pre-CGT dwelling that is used to derive assessable income?
At a glance:
  • The Tax Office has released the Capital Gains Tax (CGT) improvement threshold for the 2013/14 year.
You should: 
  • Ensure you meet your CGT obligations when making major capital improvements to a pre-CGT asset.
  • Contact us if you require any clarification or advice.
  1. The CGT improvement threshold for the 2013/14 year is $136,884 (up from $134,200 for 2012/13).
  2. The CGT improvement threshold is used when determining whether improvements made to a pre-CGT dwelling will attract CGT upon the disposal of the dwelling.
  3. A pre-CGT dwelling is one that was acquired before September 20, 1985.
  4. The dwelling is generally exempt from Capital Gains Tax (CGT) when it is sold, irrespective of what the dwelling was used for.
  5. However, where a pre-CGT dwelling is used to derive assessable income, major capital improvements made to the dwelling on or after September 20, 1985, may be considered to be a separate CGT asset.
  6. These improvements may be subject to CGT in their own right when the dwelling is eventually sold.
  7. An improvement is taken to be ‘major’ if the original cost (indexed for inflation) of the improvement is:
    1. Greater than 5% of the amount you receive when you dispose of the dwelling; and
    2. Greater than the ‘improvement threshold’ for the income year.
Remember:
  • There may be CGT consequences where major capital improvements are made to a pre-CGT dwelling that is used to derive assessable income.
This article was published on 14/10/2013 and is current as at that date

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

 

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