Capital gains: what are the CGT consequences of a lessee incurring capital expenditure on improvements to leased property?

Taxation Determination TD 56 is withdrawn with effect from today. It is replaced by Taxation Determination TD 98/23, which applies to capital expenditure on improvements to leased property incurred by a lessee both before and after the beginning of the 1998-99 income year.

There is no material change from the views that were expressed in TD 56. However, TD 98/23 includes a reference to the cost base recoupment provision (subsection 110-25(8) of the Income Tax Assessment Act 1997), which now includes a change made to clarify that a recoupment of expenditure cannot both reduce the cost base and be included in assessable income. The change adopts the Commissioner's interpretation of the old law.