Under common law, when an accessory is annexed to a principal asset (such as land) the accessory becomes part of that principal asset. Theoretically, without an adjustment to the tax rules, if the principal asset of land had been acquired pre-CGT (before 20 September 1985), any building on that land or any addition to that land would also be regarded as a pre-CGT asset — even though the building or addition to that land had been acquired post-CGT.

To get around this scenario, an adjustment was indeed made to the tax rules. Hence we have subdivision 108-D, which modifies the operational rules for CGT purposes and treats an asset as being a separate CGT asset from the principal asset where the asset is: