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Pre-CGT Status: Australia's Most Precious but Endangered Tax Attribute

Published on 20 Sep 2005 | Took place at Leonda by the Yarra, Hawthorn, VIC

Even though it has been 20 years since the introduction of capital gains tax, many taxpayers rightly or wrongly believe that their most valuable assets have retained their pre-20 September 1985 CGT exempt 'shield'. Increasingly, the validity of the CGT exempt expectation will be tested as generational change leads to the disposal of long held businesses and long held investments.

These materials will provide a useful 'checklist' of the factors to consider in determining whether a business is still pre-CGT.

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Individual sessions

Pre-CGT assets and corporate groups

Author(s):  Mark NORTHEAST

How does the tax consolidation regime handle pre-CGT status? 'Appallingly' has to be the answer to this question to date, but the Tax Institute and other bodies have been lobbying Government for change. This paper focusses on dealing with consolidation impacts of:

  • pre-CGT intra-group shareholdings and/or
  • pre-CGT underlying assets.
Materials from this session:

Dealing with pre-CGT assets

Author(s):  John YOUNG

If the asset is still pre-CGT, does that mean all dealings with it are CGT exempt? This paper considers the impact of the following direct and indirect dealings with pre-CGT assets:

  • creating new interests in pre-CGT assets
  • disposals of pre-CGT shares in companies and units in unit trusts
  • implications of restructures and roll-overs
  • interaction with the CGT SME concessions; and/or impacts of death
  • proper accounting for pre-CGT capital profits reserves (particularly for companies re: liquidations outcomes)
  • restructuring and preserving pre-CGT status - CGT roll-overs (eg. different outcomes under scrip for scrip vs demergers).
Materials from this session:

"What have you got" - is it still a pre-CGT asset?

Author(s):  Keith JAMES

Sure, the asset was acquired more than 20 years ago, but is that enough to retain its pre-CGT exempt status?

This can be impacted by:

  • an evolving and expanding business from pre-CGT goodwill
  • capital improvements to pre-CGT properties and other assets and/or
  • changes in underlying ownership of pre-CGT assets owned through interposed entities
  • the implications of intervening restructures.
Materials from this session: