ATO Interpretative Decision
ATO ID 2001/459 (Withdrawn)
Income Tax
Capital Gains Tax: CGT event I1: Short term residency exceptionFOI status: may be released
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This ATO ID has been withdrawn as the issue is dealt with in the Guide to capital gains tax 2007This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, who was an Australian resident for a short term, disregard a capital gain or capital loss from CGT event I1 happening to assets held by them prior to becoming a resident and held until after they ceased to be a resident?
Decision
Yes. Although CGT event I1 happens when the taxpayer ceases to be an Australian resident for tax purposes, the exception for short term residents in subsection 104-165(1) of the ITAA 1997 applies to disregard a capital gain or loss on those assets.
Facts
The taxpayer was a resident of a foreign country and became a resident of Australia for taxation purposes.
The taxpayer owned assets in the foreign country before they became resident of Australia.
The taxpayer was a resident of Australia for less than 5 years before migrating back to the foreign country.
The taxpayer also retained ownership of the assets in the foreign country during and after they were a resident of Australia.
Reasons for Decision
If a person ceases to be a resident, CGT event I1 happens (section 104-160 of the ITAA 1997). A capital gain or capital loss needs to be determined for each CGT asset that does not have the necessary connection with Australia owned just before the time of becoming a non-resident.
Subsection 104-165(1) of the ITAA 1997 provides an exception for a capital gain or capital loss covered by a CGT event I1 for short term residents. A short term resident is defined as an individual that was an Australian resident for less than 5 years during the 10 years prior to ceasing to be an Australian resident. For the exception to apply the asset must have been owned before becoming an Australian resident or have been acquired because of someone's death after that time.
As the taxpayer was a resident of Australia for less than 5 years and their assets in a foreign country were owned by them immediately prior to becoming a resident of Australia, any capital gain or capital loss on those assets is disregarded.
Date of decision: 26 September 2001
Legislative References:
Income Tax Assessment Act 1997
section 104-160
subsection 104-165(1)
Keywords
Capital gains tax
Resident/residency
ISSN: 1445-2782
| Date: | Version: | |
| 26 September 2001 | Original statement | |
| You are here | 27 July 2007 | Archived |
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