Taxation Determination

TD 96/32

Income tax: capital gains: can an index number for a quarter of a year of income be estimated in calculating the indexation factor under subsection 160ZJ(5) or (5A) of the Income Tax Assessment Act 1936 ?

This version is no longer current. Please follow this link to view the current version.

  • Please note that the PDF version is the authorised version of this ruling.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

FOI status:

may be releasedFOI number: I 1015135

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. No.

2. In calculating the indexation factor for the purposes of subparagraph 160ZJ(3A)(a)(iii), paragraph 160ZJ(3A)(b) or subsection 160ZJ(4), the Income Tax Assessment Act 1936 (subsection 160ZJ(5) or (5A)) requires that the 'index number' as defined in subsection 160ZJ(1) be used. Subsection 160ZJ(1) defines the expression 'index number' for use in section 160ZJ. It is defined for a quarter to mean the 'All Groups Consumer Price Index' (CPI) number (being the weighted average of the 8 capital cities) published by the Australian Statistician for the quarter. An estimated index number is not an 'index number' as defined in subsection 160ZJ(1). Section 160ZJ does not at any time, whether before or after the publication of the CPI number, permit an index number to be estimated and used to calculate the indexation factor. Nor does section 160ZJ permit the estimation of the indexation factor.

3. Until the index number for a particular quarter is published, it is not possible to calculate properly a capital gain on an asset disposed of during that quarter. For example, if an asset is disposed of during the June quarter of a year of income, and a taxpayer's year of income ends on 30 June, a taxpayer cannot legitimately use an estimated index number for that quarter in calculating a capital gain to include in an income tax return for that year.

4. It has come to our attention that certain managers and trustees of investments have been using estimated index numbers for the June quarter in order to provide capital gains advice to members as soon as possible after the end of the income year. We emphasise that such estimates do not accord with the requirements of the legislation. We neither accept, nor authorise, their use.

Note: The Australian Statistician usually publishes the All Groups CPI numbers for each quarter within four weeks after the close of the quarter. Individual taxpayers who prepare their own income tax returns do not have to lodge them, if the pattern of previous years' Commonwealth Gazette notices is followed, until four months after the end of a financial year (section 161). Managers and trustees of investments should await the publication by the Australian Statistician of the All Groups CPI number for each quarter rather than estimate the number for that quarter. When published, the All Group CPI number can be obtained either by telephoning 0055 86401 or by contacting any local tax office.

Commissioner of Taxation
19 June 1996

References

ATO references:
NO CGDET126; NAT 96/4573-0

ISSN 1038 - 8982

Subject References:
consumer price index;
estimate;
indexation;
indexation factor;
index number;
investments

Legislative References:
ITAA 160ZJ;
ITAA 160ZJ(1);
ITAA 160ZJ(3A)(a)(iii);
ITAA 160ZJ(3A)(b);
ITAA 160ZJ(4);
ITAA 160ZJ(5);
ITAA 160ZJ(5A);
ITAA 161

TD 96/32 history
  Date: Version: Change:
You are here 19 June 1996 Original ruling  
  29 November 2006 Original ruling + note Repeal provision note
  21 April 2010 Withdrawn  

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).