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Edited version of your written advice
Authorisation Number: 1012743691158
Ruling
Subject: CGT discount available for non-resident
Question 1
Are you able to calculate your CGT discount on disposal of your CGT asset using your own formula?
Answer:
No.
This ruling applies for the following period:
Year ended 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
In 200X, you purchased a CGT asset. You were an Australian resident.
In 201X, you ceased to be an Australian resident.
In May 2012, the market value of the CGT asset was less than its cost base.
In 201X, you sold the CGT asset at a gain.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 115-B ,
Income Tax Assessment Act 1997 Section 115-115,
Income Tax Assessment Act 1997 Subsection 115-115(2),
Income Tax Assessment Act 1997 Subsection 115-115(3) ,
Income Tax Assessment Act 1997 Subsection 115-115(4) and
Income Tax Assessment Act 1997 Subsection 115-115(6).
Reasons for decision
Subdivision 115-B of the Income Tax Assessment Act 1997 (ITAA 1997) introduces new legislation in regards to non-residents and the capital gains tax (CGT) discount. Any individuals who had a period of non-residency and disposed of a CGT asset after May 2012 are no longer entitled to the full 50% CGT discount, and must now apportion their discount percentage.
If an individual is a temporary or non-resident as at May 2012, they will only receive a discount for the gain from a CGT asset that accrued prior to May 2012.
Section 115-115 of ITAA 1997 defines the four different scenarios and formulas available for calculating the CGT discount available for non-residents.
Subsection 115-115(2) of ITAA 1997 will apply where the asset is acquired after May 2012.
As your asset was acquired in 200X, this formula is not available to you.
Subsection 115-115(3) of ITAA 1997 will apply where the asset is acquired before May 2012, and you were an Australian resident on May 2012.
As you were not a resident of Australia on May 2012, this formula is not available to you.
Subsection 115-115(4) of ITAA 1997 will apply where the asset is acquired before May 2012, you were a foreign or temporary resident on May 2012, the most recent acquisition of the CGT asset happened on or before May 2012 and the CGT asset's market value on May 2012 exceeds the amount that was its cost base at the end of that day.
You have stated that the market value of your CGT asset at May 2012 did not exceed its cost base that day; this formula is not available to you.
Subsection 115-115(6) of ITAA 1997 contains the final formula, and will apply where the asset is acquired before May 2012, you were a foreign or temporary resident on May 2012, and subsection 115-115(4) of ITAA 1997 does not apply to you.
The following formula, expressed as a percentage, is the discount percentage available to you.
Number of apportionable days that you were an Australian resident (but not a temporary resident) |
2x Number of days in discount testing period |
Where:
Discount testing period is the period the asset is owned by the individual.
Apportionable day means a day, after May 2012, during the discount testing period.
It is important to note that the percentage will be 0% if you were a foreign resident or temporary resident on each of the apportionable days.
In your case, as you became a non-resident prior to May 2012 you will have zero apportionable days as an Australian resident. That is, after May 2012, you were not an Australian resident for any of the days of the asset ownership period. Therefore, the discount percentage you are entitled to is 0%.