ATO Interpretative Decision

ATO ID 2003/628 (Withdrawn)

Income Tax

Capital gains tax: CGT discount - asset sold within 12 months of becoming an Australian resident.
FOI status: may be released

This ATO ID has been withdrawn as it is a straight application of the law and it does not contain an interpretative decision.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Status of this decision: Decision Withdrawn 19 March 2010

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is a capital gain made on the sale of a CGT asset by a taxpayer within 12 months of them becoming an Australian resident a discount capital gain under subdivision 115-A of the Income Tax Assessment Act 1997 (ITAA 1997) if the taxpayer owned the asset before they became a resident?

Decision

No, the capital gain is not a discount capital gain and the 50% discount percentage is therefore not available.

The CGT discount is only available for assets acquired at least 12 months before disposal. Here, the taxpayer will have acquired the asset less than 12 months before its disposal because subsection 136-40(3) of the ITAA 1997 treats the taxpayer as having acquired it when they became an Australian resident.

Facts

An individual taxpayer became an Australian resident for taxation purposes in the 2002 income year.

The taxpayer owned an asset before becoming a resident which they had acquired after 19 September 1985.

The asset did not have the necessary connection with Australia as set out in section 136-25 of the ITAA 1997.

The asset was disposed of by the taxpayer within 12 months of becoming a resident.

Reasons for Decision

A capital gain will be a discount capital gain if it results from a CGT event happening to a CGT asset that was acquired at least 12 months before the CGT event: subsection 115-25(1) and section 115-40 of the ITAA 1997.

Assets owned by a taxpayer just before becoming an Australian resident are treated as having been acquired by the taxpayer for capital gains tax purposes when they become a resident: subsection 136-40(3) of the ITAA 1997. This rule does not apply to assets that have the necessary connection with Australia as set out in section 136-25 of the ITAA 1997 and to assets acquired before 20 September 1985: subsection 136-40(1).

Therefore, the taxpayer has disposed of the asset within 12 months of its deemed acquisition. Any capital gain arising from the disposal is not a discount capital gain to which the 50% discount percentage referred to in paragraph 115-100(a) of the ITAA 1997 applies.

Date of decision: 17 June 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   subdivision 115-A
   subsection 115-25(1)
   section 115-40
   paragraph 115-100(a)
   section 136-25
   subsection 136-40(1)
   subsection 136-40(3)

Keywords
Capital gains tax
CGT asset with the necessary connection with Australia
CGT discount
CGT 50% individual discount
CGT events

Business Line: Losses and CGT Centre of Expertise

Date of publication: 25 July 2003

ISSN: 1445-2782

history

	Date:	Version:
	17 June 2003	Original statement
You are here →	19 March 2010	Archived

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