Issue
Can a taxpayer apply capital gains tax (CGT) averaging under clause 2 of Schedule 7 to the Income Tax Rates Act 1986 (Rates Act) to the capital gain arising from a CGT event that happens after 21 September 1999, on a pro rata basis for the period of ownership of the asset before that date?
Decision
No. The taxpayer cannot apply CGT averaging to the capital gain on a pro rata basis as the Rates Act was amended so that the averaging rules ceased to apply for CGT events that occur after 21 September 1999.
Facts
The taxpayer bought an asset after 20 September 1985. The taxpayer disposed of the property after 11:45 (ACT time) on 21 September 1999 and made a capital gain. The taxpayer disposed of the asset after 11.45am (ACT time) on 21 September 1999. The taxpayer wants to have CGT averaging apply to the gain on a pro rata basis taking into account the period of ownership prior to 21 September 1999.
Reasons for Decision
The averaging concession was removed for CGT events occurring after 11.45am EST on 21 September 1999, and applies to assessments for the 1999/2000 and later years of income.
There is no provision which provides for the pro rata of averaging based on the period for which the asset was owned prior to 21 September 1999. Therefore, the taxpayer cannot apply the averaging rules to the sale of the asset, as the CGT event occurred after 21 September 1999. Notation: This ATO ID has been amended to clarify the time the taxpayer disposed of the asset.