• What is a taxable Australian asset and a CGT asset having the necessary connection with Australia?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    In determining whether an asset is a taxable Australian asset or a CGT asset having the necessary connection with Australia, the assumption that the CFC is a resident of Australia is ignored. In almost all cases, however, the residency assumption will make no difference.

    Broadly, a taxable Australian asset or a CGT asset having the necessary connection with Australia is:

    • land or buildings in Australia
    • assets used in carrying on business through a permanent establishment in Australia
    • a share, or an interest in a share, in a company which was a resident private company in the income year in which the disposal took place
    • a share, or an interest in a share, of a company which was an Australian resident and not a private company and at any time in the preceding five years a taxpayer or an associate, alone or together, owned 10% of the issued capital of the company
    • an interest in an Australian resident trust
    • a unit in a unit trust which was an Australian resident where, at any time in the preceding five years, a taxpayer or an associate, alone or together, owned 10% of the units in the unit trust
    • an option or right to acquire an asset referred to above
    • certain assets that have been transferred under the rollover provisions
    • certain rights that have a connection with Australia.

    Note

    The specific list of CGT assets having the necessary connection with Australia is set out in section 136-25 of ITAA 1997.

    Last modified: 05 Dec 2006QC 17522