“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.