The third element is the costs of owning the *CGT asset you incurred (but only if you *acquired the asset after 20 August 1991). These costs include: > > (a) interest on money you borrowed to acquire the asset; and > > (b) costs of maintaining, repairing or insuring it; and > > (c) rates or land tax, if the asset is land; and > > (d) interest on money you borrowed to refinance the money you borrowed to acquire the asset; and > > (e) interest on money you borrowed to finance the capital expenditure you incurred to increase the asset's value.

1. The overarching issue is whether Mr Halse has discharged his onus under section 14ZZK of Taxation Administration Act 1953 (Cth) (TAA53) by proving the 2021 NOA and 2024 NOAs are excessive or otherwise incorrect, and what the assessments should have been.
2. In the circumstances of this case, the Tribunal must determine whether the Applicant is entitled to include the rates and land taxes incurred in respect of the CGT asset (being the Property) in calculating the costs of owning the CGT asset under subsection 110-25(4) of the ITAA 97.

1. The Tribunal had the benefit of the following documents and evidence:
   • The Tribunal documents; [10]
   • The Respondent's Statement of Facts, Issues and Contentions;
   • The response and evidence filed by the Applicant in September[11] and November 2025;[12]
   • The written outline of submissions filed by the Respondent;
   • The oral evidence of Mr Halse;
   • The documents tendered by Mr Halse at the hearing; and
   • The oral submissions of each party.

1. The material provided by Mr Halse included a chronology and history of living arrangements and property ownership from the mid 1960's to the sale of Parcel 2, which allowed the Tribunal to understand the full context of the current application.
2. Mr Halse explained that when he purchased the Property in 1989, his intention at the time was to eventually build a house on the block to live in. He went as far as having plans designed by a builder.
3. As a result of changing personal circumstances, Mr Halse decided to subdivide the Property and sell Parcel 2. He retained Parcel 1 as a possible future home site. A few years later, when it became apparent he was not going to return to Port Lincoln to live, he decided to sell Parcel 1 so he could utilise the proceeds.
4. Mr Halse repeated these matters in his oral evidence and reiterated the arguments in respect of the illogicality and unfairness of the provision relied on at the objections stage.

1. The sole issue concerns whether the Applicant is entitled to include rates and land taxes in calculating the costs of owning the CGT asset under subsection 110-25(4) of the ITAA 97 as part of the cost base. The parties disagree as to the correct statutory construction of this provision and application to the facts of this case.
2. The text of s 110-25 (4) of the ITAA 97 explicitly states that the third element of the cost base is '...the costs of owning the CGT asset you incurred (but only if you *acquired the asset after 20 August 1991).[13] Statutory construction must begin with the text itself. The language employed in the text of the legislation is the surest guide to the legislative intention.[14] The natural and ordinary meaning of the provision is clear and unambiguous. The costs of owning the CGT asset will only form part of the costs base if the CGT asset was acquired after 20 August 1991.
3. It is not in dispute Mr Halse acquired the Property for the purposes of s 109-5 of the ITAA 97 on 20 October 1989, and the subsequent subdivision into Parcel 1 and Parcel 2 did not vary or change this.[15] As the date of acquisition of the relevant CGT asset was before 21 August 1991, the Applicant is unable to satisfy the test in 110-25(4) of the ITAA 97.
4. Mr Halse submitted that based on a purposive interpretation of the law, he should be entitled to claim the rates and taxes as part of the cost base notwithstanding the acquisition date limitation. In his view, the purpose of the provision is to ensure taxpayers are taxed on real economic gains and denying the inclusion of these expenses in the costs base is inconsistent with that objective. The subsection, insofar as it imposes an acquisition date restriction, is both unfair and invalid in operation. The provision produces an arbitrary outcome between taxpayers based solely on the acquisition date of the CGT asset, rather than on nature of the expenses incurred.
5. A plain reading of 110-25(4) reflects a deliberate intention to only include the costs of owning a CGT asset in the cost base, to CGT assets acquired after 20 August 1991. The Applicant's argument ascribes a statutory intention to the provision which nullifies the effect of a clearly expressed position.
6. The Applicant encouraged the Tribunal to have regard to extrinsic materials to support the purposive interpretation. These, however, are only useful insofar as they assist in clarifying or fixing the meaning of statutory words. Here the statutory language is clear and unambiguous. The extrinsic material cannot alter or displace the meaning conveyed by the text of the provision.[16]
7. The Tribunal's function on review of a taxation objection decision is to determine, on the material before it, whether the Commissioner's assessment is excessive or incorrect and what the assessment should be. Questions about the validity of the legislation or whether the law ought to operate differently as a matter of policy or fairness are matters for the Courts or Parliament. In undertaking a merits review, the Tribunal cannot ignore, disregard or recast statutory provisions by reference to its own view of what would be fair, reasonable or desirable of the legislative scheme.
8. Mr Halse also raised that he did not intend to purchase the Property as an investment, or as he has expressed it, for capital gain purposes. This submission is misconceived. Had the Property been purchased for a profit-making purpose, the sale of Parcel 1 and Parcel 2 would still have attracted taxation consequences. The CGT provisions were specifically designed to tax, as statutory income, realised gains.
9. Mr Halse also raised that the Property was purchased with a view to later becoming his primary residence. How this prevents the application of the CGT provisions was not fully explained but in any event the Property was a vacant block and remained so after subdivision and sale. It was never the primary residence of the Applicant for the purposes of the statutory exception. [17]
10. The Tribunal acknowledges Mr Halse presented his case respectfully and in a considered way. The Tribunal also accepts the operation of the taxation law can, on occasion, present outcomes that may be perceived as unfair by individual taxpayers. Notwithstanding this, the Tribunal is required to apply the law as enacted to the facts before it.

1. The orthodox interpretation and application of the law to the facts in this case means that Mr Halse is not entitled to include the expenses associated with the ownership of the CGT asset in the cost base for CGT purposes as the Property was acquired by him before 21 August 1991.
2. The 2021 NOA and 2024 NOA are therefore not excessive or otherwise incorrect. The Respondent's objection decision is affirmed.

Litigation and Legal Services, Australian Taxation Office

[1] The Tribunal was not provided with the primary evidence in respect of some matters (for example records from the Lands Title Office confirming the date of acquisition of the CGT asset).In circumstances where the parties confirmed the underlying facts are agreed, the absence of the source documents is not material to the Tribunal's decision of resolution of the issues.

[5] Ibid s 102-5(1)

[6] Ibid ss102-5 and

[7] Ibid s 104-10(1)

[8] Ibid s108-5

[9] Ibid s 104-10(2)

[14] Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 ; [2009] HCA 41 at [47]

[15] See Taxation Determination TD 97/3

[16] Federal Commissioner of Taxation v Consolidated Media Holdings Pty Ltd [2009] HCA 55 at [39]