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End of attention
The following is a summary of recent CGT changes and proposed changes to remember when calculating your capital gain or capital loss:
- New CGT rules provide concessional treatment to land owners who enter into conservation covenants. From 15 June 2000, a land owner who receives capital proceeds for entering into a conservation covenant will be treated as if they had disposed of part of their land. New rules will also operate from 1 July 2002 for land owners who do not receive any capital proceeds for entering into a conservation covenant.
- Changes to the way that CGT event E4 operates when a trustee makes a non-assessable payment to a beneficiary of the trust:
- prevent CGT event E4 applying when a trustee makes a payment to a beneficiary out of the CGT discount amount
- treat a payment by a trustee to a beneficiary of an amount associated with building allowances as a non-assessable amount to which CGT event E4 applies.
- A new concession for shareholders in listed investment companies (LICs) has been introduced to ensure that investors in LICs are placed in a similar tax position to investors in managed funds in relation to discount capital gains made by these entities. Certain shareholders will be entitled to an income tax deduction where dividends paid to them include an LIC capital gain amount. As this measure does not affect the shareholders' capital gains or capital losses, it is not included in this guide. You can find more information in the publication You and your shares.
- Changes to the treatment of depreciating assets will now result in a capital gain or capital loss arising to the extent that a depreciating asset has been used for a non-taxable purpose (for example, used privately). New CGT event K7 happens if a balancing adjustment event occurs for a depreciating asset if, at some time during the period it was held, the depreciating asset was used for a purpose other than a taxable purpose. A balancing adjustment event most commonly occurs for a depreciating asset if a taxpayer stops holding it-for example, it is sold, lost or destroyed.
A capital gain or capital loss under CGT event K7 is calculated using the uniform capital allowance system concepts of 'cost' and 'termination value' and not the concepts found in the CGT provisions (cost base and capital proceeds).
A capital gain made from CGT event K7 may qualify for the CGT discount if the conditions in Division 115 of the Income Tax Assessment Act 1997 (ITAA 1997) are satisfied. The small business CGT concessions do not apply to a capital gain from CGT event K7.
The introduction of the uniform capital allowance regime also saw the repeal of CGT event K1 (about partial realisation of intellectual property).
For more information about the uniform capital allowance regime, see the Guide to depreciating assets.
- Changes that operate from 15 May 2001 ensure that there are no adverse tax consequences from the Commonwealth HIH rescue package. Payments under other arrangements established by State and Territory Governments will receive identical tax treatment if they are listed in the income tax regulations.
The provisions ensure that:
- HIH rescue payments are treated as insurance payments by an HIH company
- any capital gain or capital loss that would otherwise arise from the assignment of a right in relation to a general insurance policy held with an HIH company to the Commonwealth, the trustee of the HIH trust or a prescribed entity is disregarded.
Last modified: 06 Oct 2009QC 27417
- In October 2001, the Treasurer announced a new CGT roll-over would be available for fixed trusts that transfer their assets to a company. In Press release No. 77 of 2001, the Treasurer indicated that this roll-over would apply to asset transfers from 11 November 1999. The new roll-over will facilitate the transfer of assets from a fixed trust to a company increasing commercial flexibility to suit the needs of businesses. The roll-over will apply to the trust as well as to members' interests in the trust. To date the legislation for this measure has not been introduced into Parliament.