Draft Taxation Determination
Income tax: capital gains: if a taxpayer who owns pre-CGT land and trees sells timber according to two post-CGT contracts - one for the sale of the uncut timber and the other for granting the purchaser of the timber the right to enter the taxpayer's property over a period of time and remove timber as and when required - how is the sale treated for CGT purposes?
Please note that the PDF version is the authorised version of this ruling.This document has been finalised by TD 93/81.
FOI status:draft only - for comment
|Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.|
2. Accordingly, as the grant of the profit a'prendre gives rise to the disposal of a post-CGT asset created by the grantor i.e. the taxpayer, the sale of the timber is subject to the CGT provisions even though the land and trees were acquired pre-CGT (IT2561).
Farmer Joe is a primary producer who has been farming land acquired by him pre-CGT. On 1 July 1992, he sold all the pre-CGT timber growing on the land to an unrelated purchaser according to two contracts:-
Commissioner of Taxation
18 March 1993