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Edited version of private advice
Authorisation Number: 1052341237938
Date of advice: 11 December 2024
Ruling
Subject: CGT assets - ceasing Australian tax residency
Question 1
Can you choose to disregard all capital gains and losses on your CGT assets when you stop being an Australian resident for tax purposes?
Answer 1
Yes.
Further information can be found by searching "QC 66059' on ato.gov.au.
This ruling applies for the following periods:
Year ending XX June 20XX
Year ending XX June 20XX
The scheme commenced on:
XX July 20XX
Relevant facts and circumstances
This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are currently a resident for tax purposes.
You intend to cease being an Australian resident for tax purposes and are part way though the immigration process.
You intend to disregard all capital gains and losses on your CGT assets that are not taxable Australian property when you stop being an Australian resident for tax purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-160
Income Tax Assessment Act 1997 section 104-165
Reasons for decision
Section 104-160 of the Income Tax Assessment Act 1997 (ITAA 1997) states that CGT event I1 occurs when an individual ceases to be an Australian resident, the time of the event is when the individual ceases to be an Australian resident. Calculations of capital gains or losses must be done for each CGT asset just before the CGT event happens except ones having the necessary connections with Australia (that is, taxable Australian property).
However, subsection 104-165(2) of the ITAA 1997 enables any individual ceasing to be a resident of Australia to choose to disregard making a capital gain or loss on CGT assets caught by CGT event I1. The choice must be exercised for all assets caught by CGT event I1.
Under subsection 104-165(3) of the ITAA 1997, these assets will then be deemed to have the necessary connection with Australia until either a CGT event happens in relation to the asset, or the individual again becomes an Australian resident.
In your situation, you can choose to disregard a capital gain or loss when you cease to be an Australian resident for tax purposes.