Published on 06 Oct 06
by VICTORIAN DIVISION, THE TAX INSTITUTE
“The Lord giveth and the Lord taketh away”. He’s not the only one. The welcome reform of the provisions for deductibility of expenditure otherwise unrecognised in the tax system (so-called “black hole expenditure”) was accompanied by an expansion of the rules defining amounts included in the CGT cost base, thus making those amounts non-deductible under the black hole rules. This paper discusses that feature of the reform, including:
- identifying “capital expenditure”, especially in start up contexts
- the meaning of “in relation to” the relevant “business”, for example, in a business acquisition context
- what expenditure on someone else’s business will be deductible.