Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)CHANGE OF TITLE - TAX LAW IMPROVEMENT BILL (No. 1) 1998 - SENATE - Explanatory Memorandum.
Chapter 2.3 - General rules
Overview
This segment contains rules in Division 103 that apply generally to other CGT provisions.
Part A summarises these rules.
Part B explains changes from the 1936 Act. Part C explains why some provisions of the 1936 Act have not been rewritten.
A. Summary of the new law
Division 103 contains rules that apply generally to other CGT provisions thereby avoiding duplication.
These rules extend the meaning given to particular terms used in the other provisions. [section 103-1]
Payments or expenditure are not always in money. Some provisions indicate that payment includes the giving of property. In such cases the amount of the payment or expenditure will include the market value of the property. [section 103-5]
Amounts received include amounts applied for an entitys benefit. An entitlement to receive an amount includes an entitlement to have it applied for an entitys benefit. It also includes an amount, or instalments, actually received at a later time. [section 103-10]
Requirement to pay money or give property
A requirement to pay money or give property includes an amount that is to be paid or given at a later date, and includes instalment payments. [section 103-15]
Amounts expressed in foreign currency
Amounts expressed in foreign currency must be translated into the Australian currency equivalent at the relevant time. [section 103-20]
It also provides the rules that relate to choices that a taxpayer may make under Parts 3-1 and 3-3. [section 103-25]
B. Discussion of changes
Section 103-5 Giving property as part of a transaction
When property is given as or as part of a payment, the market value of the property is taken into account in working out the amount of the payment.
Include a common rule to cover all those provisions that refer to payments or expenditure that contemplate the giving of property instead of, or in addition to, the payment of money.
The inclusion of a common rule avoids duplication.
This section states that the choices contemplated by the CGT provisions are evidenced by the way income tax returns are prepared. For example, a taxpayers choice of roll-over relief is evident if a capital gain that would otherwise arise is not taken into account in calculating the net capital gain or loss as returned for that income year.
Provide a standard rule for the making of choices.
The rewritten provision states the general rule that will apply in the 1997 Act CGT provisions, thereby avoiding unnecessary repetition. It also standardises the time by which, in the absence of the Commissioner exercising a discretion to allow more time, a choice needs to be made.
C. Provisions of the old law that have not been rewritten
Some redundant provisions have not be included in the new law. They are summarised in the following table:
| 160K(7) | No consideration in respect of acquisition of asset | An interpretational rule not needed in the redrafted law. |
| 160K(8) | No consideration in respect of disposal of asset | An interpretational rule not needed in the redrafted law. |
| 160K(9) | Disposal of an asset | An interpretational rule not needed in the redrafted law. |
| 160K(10) | Trustee of a trust estate . | A clarifying expression not needed in the redrafted law. |