ATO Interpretative Decision

ATO ID 2003/967 (Withdrawn)

Income Tax

Net exempt income - 'CGT concession amount' of a discount capital gain
FOI status: may be released

This ATO ID has been withdrawn as it does not accurately reflect the ATO view.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does the CGT concession amount of a discount capital gain form part of net exempt income under section 36-20 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. The CGT concession amount of a discount capital gain does not form part of net exempt income under section 36-20 of the ITAA 1997.

Facts

A taxpayer made a discount capital gain from the disposal of a CGT asset.

The discount percentage was applied to the discount capital gain.

Reasons for Decision

'Net exempt income' is defined in section 36-20 of the ITAA 1997 and is dependent on whether a taxpayer has 'exempt income'.

What represents 'exempt income' is set out in section 6-20 of the ITAA 1997. Basically, an amount of ordinary income or statutory income is 'exempt income' if it is made exempt by a provision in the ITAA 1997 or another Commonwealth law.

Capital gains are categorised as statutory income (see subsection 6-10(2) and section 10-5 of the ITAA 1997). For a capital gain to be included in assessable income the capital gain must form part of the net capital gain made by the taxpayer for the income year. A net capital gain is worked out using the five steps in section 102-5 of the ITAA 1997. Step 3 of subsection 102-5(1) of the ITAA 1997 says that a discount capital gain is to be reduced by the discount percentage. The amount of the CGT discount component is commonly referred to as the 'CGT concession amount'.

Consequently, even though a CGT concession amount is not included in assessable income, it is not exempt income as no provision in the ITAA 1997, or another Commonwealth law, specifically exempts this amount.

Date of decision: 15 January 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-10(2)
   section 6-20
   section 10-5
   section 102-5
   subsection 102-5(1)

Keywords
Exempt income
CGT discount

Business Line: Losses and CGT Centre of Expertise

Date of publication: 31 October 2003

ISSN: 1445-2782

history

	Date:	Version:
	15 January 2003	Original statement
You are here	20 November 2003	Archived

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