Taxation Determination

TD 2008/29A2 - Addendum

Income tax: consolidation: capital gains: do the core consolidation rules in Division 701 of the Income Tax Assessment Act 1997 modify the effect of the CGT contract rules if an entity contracts to buy or sell a CGT asset and the contract settles after the entity becomes, or ceases to be, a member of a consolidated group?

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Addendum

This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953. It amends Taxation Determination TD 2008/29 to reflect changes introduced by Schedule 5 to the Tax Laws Amendment (2010 Measures No. 1) Act 2010.

TD 2008/29 is amended as follows:

1. Paragraph 5

Omit the note after the paragraph; substitute:

Note: The timing of when certain CGT events are taken to have occurred has been amended by the Tax Laws Amendment (2010 Measures No. 1) Act 2010. The Commissioner's view contained in this Taxation Determination is broadly that where a CGT event arises in relation to a CGT asset because a contract or agreement has been entered into, the CGT event is taken to have occurred at the earlier time when the contract was entered into.

Section 716-860 of the Income Tax Assessment Act 1997 introduced by Tax Laws Amendment (2010 Measures No. 1) Act 2010 modifies the CGT timing rules when an entity joins or leaves a consolidated group and the CGT event straddles the joining or leaving time. For contracts entered into after 8 May 2007, the time of the CGT event happening to the joining entity is not taken to be the time the contract was entered into but the time when the circumstances that gave rise to the CGT event first existed. That is when the change of beneficial ownership occurs.

To the extent that section 716-860 of the Income Tax Assessment Act 1997 does not affect matters covered in this Taxation Determination, the Commissioner's view will continue to apply.

This Addendum applies to CGT events that happen after 8 May 2007, the date of application of the amendments to the Income Tax Assessment Act 1997 by Part 17 of Schedule 5 to the Tax Laws Amendment (2010 Measures No. 1) Act 2010.

Commissioner of Taxation
30 May 2012

References

ATO references:
NO 1-3WQFK79