The ATO issued a Determination: TD 2017/16 on Wed 14.6.2017, advises that the CGT improvement threshold for the 2017-18 income year is $147,582 (up from $145,401 in 2016-17). The threshold is changed to take account of inflation.
The improvement threshold is relevant to s 108-70 of the ITAA 1997, which treats an improvement to a pre-CGT asset, as separate if it’s cost base exceeds this threshold AND 5% of the proceeds from the CGT event affecting the pre-CGT asset. It is similarly relevant to s108-75, which relates to capital improvement to a CGT assets for which a rollover may be available.
The improvement threshold is indexed annually – see subsection 108-85(2) of the ITAA 1997. Subdivision 960-M of the ITAA 1997 (about indexation) provides guidance on how to index the improvement threshold amount and how to calculate the indexation factor – see sections 960-270 and 960-275 of the ITAA 1997. This Taxation Determination is published in accordance with subsection 108-85(3) of the ITAA 1997 before the start of the 2017-18 financial year.
If the assets are separate, then the proceeds must be apportioned between the two assets under s116-40 of the ITAA 1997.
[ATO – TD 2017/16; FJM; LTN 110, 14/6/17]