ATO Interpretative Decision

ATO ID 2003/166

Income Tax

CGT small business concessions: maximum net asset value test - Australian currency
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is Australian currency, that is, notes and coins, a CGT asset for the purposes of determining the 'net value of the CGT assets' of certain entities under paragraph 152-15(a) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. Australian currency is a CGT asset for the purposes of determining the 'net value of the CGT assets' of certain entities under paragraph 152-15(a) of the ITAA 1997.

Facts

The taxpayer carries on business and at any point in time has Australian currency on hand (that is, notes and coins).

Reasons for Decision

A basic condition for small business relief in Division 152 of the ITAA 1997 is the maximum net asset value test in section 152-15 of the ITAA 1997. Under this test the net value of the CGT assets of the taxpayer and certain related entities must not exceed $5 million (or $6 million for the 2007-08 and later income years).

In this context, Australian currency, being Australian notes issued by the Reserve Bank of Australia or Australian coins issued on the authority of the Federal Treasurer, is a CGT asset, and is therefore included in the calculation of the 'net value of the CGT assets' under section 152-15 of the ITAA 1997.

Note: Australian currency is not a CGT asset under section 108-5 of the ITAA 1997 when it is used as legal tender (Taxation Determination TD 2002/25).

Date of decision: 13 February 2003

Year of income: Year ending 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   section 108-5
   section 152-15
   paragraph 152-15(a)

Related Public Rulings (including Determinations)
Taxation Determination TD 2002/25

Keywords
Keywords
Capital gains tax
CGT assets
Active asset test
CGT small business relief
Basic conditions for relief
Maximum net asset value test

Siebel/TDMS Reference Number: 345537

Business Line: Public Groups and International

Date of publication: 28 March 2003

ISSN: 1445-2782

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