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14 Jan 09 Decision Impact Statement - Kafataris

The ATO has issued a Decision Impact Statement in relation to the Federal Court decision in Kafataris v FCT [2008] FCA 1454; 2008 ATC 20-048. The case concerned whether CGT event E1 happened when a taxpayer's interest in real property was placed on trust, which trust was in the nature of a superannuation fund of which the taxpayer was a member. In particular, the case concerned whether the absolute entitlement exception in s 104-55(5)(a) ITAA 1997 applied.

The ATO states that the decision confirms the correctness of the Commissioner's approach to what is meant by absolute entitlement in the context of the CGT provisions, including s 106-50 of the ITAA 1997.

TR 2004/D25 sets out the ATO's current administrative treatment of the meaning of the words 'absolutely entitled to a CGT asset as against the trustee' as used in the CGT provisions. As noted in the header to the ruling, that ruling will remain a draft while consultation with Treasury continues concerning certain problems that arise in the practical application of the provisions. The draft ruling does not apply to members of a superannuation fund in respect of assets held by a fund (paragraph 6). The ATO considers that the approach taken by the Court aligns with the "core principle" adopted in the ruling at paragraph 10.

For a copy of the Decision Impact Statement, go here.

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