ATO Interpretative Decision
ATO ID 2001/456
Income Tax
Capital Gains Tax: Non-resident: Necessary connection with AustraliaFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 non-resident who disposes of a residential property located in Australia make a capital gain or loss under section 136-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes, a capital gain or capital loss can arise under section 136-10 of the ITAA 1997 as the property has the necessary connection with Australia as defined in section 136-25 of the ITAA 1997.
Facts
A non-resident owned a residential property in Australia.
The non-resident disposed of the property.
Reasons for Decision
Section 136-10 of the ITAA 1997 sets out the circumstances when a non-resident can make a capital gain or capital loss from a CGT event. For CGT event A1 (disposal of a CGT asset) a capital gain or capital loss can be made by a non-resident if the CGT asset the subject of the CGT event, has the necessary connection with Australia. Each category of asset listed in section 136-25 of the ITAA 1997 is relevant for CGT event A1.
Section 136-25 of the ITAA 1997 sets out a table listing nine categories of CGT assets that have the necessary connection with Australia. Category 1 in the table states that the following assets (relating to land) have the necessary connection with Australia:
- (a)
- land, or a building or structure in Australia;
- (b)
- an interest in land in Australia, or a right, power or privilege to do with land in Australia;
- (c)
- a stratum unit in Australia, or an interest in a stratum unit in Australia;
- (d)
- a share in a company that owns a building on land in Australia that gives you a right to occupy a flat or home unit in the building.
The non-resident owned a residential property located in Australia. The property is a CGT asset which has the necessary connection with Australia under section 136-25 of the ITAA 1997. The non-resident can make a capital gain or capital loss under section 136-10 of the ITAA 1997 when that property is sold.
Date of decision: 27 September 2001
Legislative References:
Income Tax Assessment Act 1997
section 136-10
section 136-25
Keywords
Capital gains tax
Capital gains
CGT events
Non resident individuals
CGT asset with the necessary connection with Australia
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 27 September 2001 | Original statement |
| 20 July 2007 | Archived |
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