09 Jun 06 NTLG CGT and Losses SubcommitteeCarlo Moretti (PKF Chartered Accountants, Sydney) represented the Taxation Institute at the NTLG CGT and Losses Subcommittee meeting on Wednesday 7 June 2006 in Sydney. The ATO provided an update on its CGT compliance program in respect of individuals. The ATO has completed 6,000 risk reviews and about 3,000 property and share transaction audits. One area of focus is on owner/builders who are repeatedly renovating their homes and selling at a profit. The ATO also noted that CGT reduction schemes are still proliferating.
The ATO also noted that they are reviewing a number of cases in light of the High Court decision Dick Smith Electronics (DSE), which raised the broader notion of what is 'consideration' for the CGT regime. In particular they are exploring whether a dividend can be consideration. Carlo believed that the ATO are reading too much into the DSE Case as it seems to be a peculiar case based on its facts.
The ATO again reinforced its view in TR 94/30 that preference shares should be dealt with before the demerger (eg convert RPS to ordinary shares).