ATO Interpretative Decision
ATO ID 2003/766 (Withdrawn)
Income Tax
Capital gains tax - making a choice under CGT Event I1 - choice to disregard gain or lossFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 25 January 2008
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer choose under subsection 104-165(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to disregard a capital gain or capital loss from 'some' of the taxpayer's CGT assets covered by CGT event I1?
Decision
No. A taxpayer can only make a choice under subsection 104-165(2) of the ITAA 1997 to disregard a capital gain or capital loss from 'all' of the taxpayer's CGT assets covered by CGT event I1.
Facts
The taxpayer, an individual, purchased shares in two publicly listed Australian companies after 19 September 1985.
The taxpayer was an Australian resident for taxation purposes when they purchased the shares and had always been an Australian resident.
The taxpayer later stopped being an Australian resident for taxation purposes.
The shares do not have the necessary connection with Australia as defined in Item 5 in the table in section 136-25 of the ITAA 1997.
Reasons for Decision
CGT event I1 happens when a taxpayer stops being an Australian resident for taxation purposes (subsection 104-160(1) of the ITAA 1997). The taxpayer is required to calculate a capital gain or capital loss for each CGT asset they owned just before they stop being a resident (except assets having the necessary connection with Australia) (subsection 104-160(3) of the ITAA 1997).
However, an individual can choose to disregard all capital gains and capital losses from CGT event I1 happening (subsection 104-165(2) of the ITAA 1997). The choice, if made, must be made for gains and losses from 'all' CGT assets to which CGT event I1 applied. A taxpayer cannot selectively disregard capital gains or capital losses for some only of the CGT assets they owned just before they stop being an Australian resident.
Under subsection 104-165(3) of the ITAA 1997 the effect of making this choice is to treat the CGT assets otherwise caught by CGT event I1 as having the necessary connection with Australia until the earlier of:
- (a)
- a CGT event happening in relation to the asset; or
- (b)
- the taxpayer becoming an Australian resident.
This means a capital gain or capital loss will be taken into account by the taxpayer on a subsequent disposal of the assets.
Date of decision: 22 April 2003Year of income: 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
subsection 104-160(1)
subsection 104-160(3)
subsection 104-165(2)
subsection 104-165(3)
section 136-25
ATO ID 2001/459
Keywords
Capital gains tax
Non resident individuals
CGT asset with the necessary connection with Australia
ISSN: 1445-2782
| Date: | Version: | |
| 22 April 2003 | Original statement | |
| You are here → | 25 January 2008 | Archived |