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  • Advice under development – capital gains tax issues

    We are developing advice and guidance on the following capital gains tax issues.

    [3802] Trust capital gains

    Title
    Final Taxation Determination
    Income tax: is the source concept in Division 6 of Part III of the Income Tax Assessment Act 1936 relevant in determining whether a non-resident beneficiary of a resident trust (or trustee for them) is assessed on an amount of trust capital gain arising under Subdivision 115–C of the Income Tax Assessment Act 1997?

    Purpose
    The final Determination will set out the Commissioner's view on the taxation treatment of capital gains for a non-resident beneficiary or trustee of a resident trust.

    Expected completion
    To be finalised at the conclusion of current litigation

    Comments
    Draft TD 2019/D7 published on 30 August 2019. Comments period closed on 27 September 2019. Completion of the final Determination is on hold pending the outcome of Federal Court litigation.

    Contact
    Karen Rooke, Tax Counsel Network
    Phone: (02) 9374 1059
    Karen.Rooke@ato.gov.au

    [3803] Capital gain from a non-resident beneficiary of a non-fixed trust

    Title
    Final Taxation Determination
    Income tax: does Subdivision 855–A (or subsection 768–915(1)) of the Income Tax Assessment Act 1997 disregard a capital gain that a foreign resident (or temporary resident) beneficiary of a resident non-fixed trust makes because of subsection 115-215(3)?

    Purpose
    The final Determination will set out the Commissioner's view on the taxation treatment of capital gains from non-taxable Australian property assets of a non-fixed trust.

    Expected completion
    To be finalised at the conclusion of current litigation

    Comments
    Draft TD 2019/D6 published on 30 August 2019. Comments period closed 27 September 2019. Completion of the final Determination is on hold pending the outcome of Federal Court litigation.

    Contact
    Karen Rooke, Tax Counsel Network
    Phone: (02) 9374 1059
    Karen.Rooke@ato.gov.au

    [3953] Back-to-back CGT rollovers

    Title
    Planned sequential transactions and the 'nothing else' condition of a roll-over

    Purpose
    This guidance will provide the Commissioner’s view on the interpretation and application of the ‘nothing else’ condition in CGT rollovers.

    Expected completion
    To be advised

    Comments
    Paragraphs 2, 3 and 55, and Examples 3 and 4 of Taxation Determination TD 2020/6 Income tax: what is a 'restructuring' for the purposes of subsection 125-70(1) of the Income Tax Assessment Act 1997? discuss aspects of sequential transactions.

    Contact
    Adam Pritchard, Public Groups and International
    Phone: (02) 9374 2775
    Adam.Pritchard@ato.gov.au

    [3964] Appointment of capital – CGT events E5 or E7

    Title
    Draft Taxation Determination
    Does CGT event E5 or E7 happen if the trustee of a discretionary trust appoints an amount of capital to a beneficiary (for example, by special resolution) and later makes a capital distribution in Australian currency in satisfaction of the appointed interest?

    Purpose
    The draft Determination will set out the Commissioner’s preliminary view on the CGT consequences of:

    • appointing an amount of capital to a beneficiary
    • the subsequent distribution of Australian currency to the beneficiary in satisfaction of the capital interest.

    Expected completion
    To be advised

    Comments
    The release of this and related Determinations (items 3965 and 3966) has been delayed due to higher priority work.

    Contact
    Justin Dearness, Tax Counsel Network
    Phone: (07) 3213 5745
    Justin.Dearness@ato.gov.au

    [3965] Australian currency denominated asset – CGT events E5 to E7

    Title
    Draft Taxation Determination
    Can an asset with a face value in Australian currency (including an Australian currency banknote or coin) be a CGT asset for CGT events E5 to E7?

    Purpose
    The draft Determination will set out the Commissioner's view on whether assets with a face value in Australian currency (including Australian currency itself) can be CGT assets for CGT events E5 to E7.

    Expected completion
    To be advised

    Comments
    The release of this and related Determinations (items 3964 and 3966) has been delayed due to higher priority work.

    Contact
    Justin Dearness, Tax Counsel Network
    Phone: (07) 3213 5745
    Justin.Dearness@ato.gov.au

    [3966] Unit trust – CGT events E5 to E8

    Title
    Draft Taxation Determination
    What is the meaning of the term ‘unit trust’ in CGT events E5 to E8, and what are the interaction implications for other CGT events, in particular CGT events E4 and C2?

    Purpose
    The draft Determination will set out the Commissioner’s proposed view on:

    • what is a ‘unit trust’ for CGT events E5 to E8
    • its implications for other CGT events.

    Expected completion
    To be advised

    Comments
    The release of this and related Determinations (items 3964 and 3965 has been delayed due to higher priority work.

    Contact
    Justin Dearness, Tax Counsel Network
    Phone: (07) 3213 5745
    Justin.Dearness@ato.gov.au

    [3973] The first element of cost base and other deductible expenditure

    Title
    Final Taxation Determination
    Income tax: where a liability is assumed on acquisition of a CGT asset, is the assumed liability excluded from the cost base of the asset if expenditure on discharge of the liability is deductible?

    Purpose
    The final Determination will provide the Commissioner’s view on the treatment of liabilities assumed upon acquisition of a CGT asset and whether on discharge of these liabilities, subsection 110-45(2) of the Income Tax Assessment 1997 will apply such that they do not form part of the cost base.

    Expected completion
    To be advised

    Comments
    Draft TD 2019/D11 published on 30 October 2019. We are in the process of reviewing comments provided, including a submission that was revised in November 2020. The ATO is currently exploring this issue from both a purchaser and vendor perspective and its interaction with the broader tax legislation.

    Contact
    Matt Miller, Tax Counsel Network
    Phone: (07) 3213 6658
    Matthew.Miller@ato.gov.au

    [4030] Water rights

    Title
    Draft Taxation Determination
    Income tax: are water access entitlements taxable Australian real property under Division 855 of the Income Tax Assessment Act 1997?

    Purpose
    This draft Determination will clarify whether certain capital gains tax (CGT) assets, such as water access entitlements, are ‘taxable Australian real property’. This will provide certainty to foreign residents on whether a capital gain or loss from a CGT event that happens in relation to interests in water access entitlements is disregarded.

    Expected completion
    October 2021

    Contact
    Shelley McCann. Tax Counsel Network
    Phone: (07) 3213 5634
    Shelley.McCann@ato.gov.au

    Last modified: 17 Sep 2021QC 50316