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The ATO has released an Interim Decision Impact Statement in relation to the decision of the Full Federal Court in FCT v Byrne Hotels Qld Pty Ltd [2011] FCAFC 127.

The case concerned whether a real estate agent commission and legal fees are liabilities "just before" a CGT event for the taxpayer to obtain a small business relief concession.

The Full Federal Court determined that in the context of Division 152, "liabilities" should be treated symmetrically with "assets". The Court found that as contingent assets can be included in the net CGT asset value calculation in s 152-20(1), on the basis of the definition of CGT assets in s 108-5, then liabilities should be matched to assets and contingent liabilities included as liabilities.

The High Court refused the Commissioner special leave to appeal this decision in FCT v Byrne Hotels Qld Pty Ltd [2012] HCATrans 141 (8 June 2012).

The Interim Decision Impact Statement notes:

"Accordingly, the ATO view in TD 2007/14 that the term 'liabilities' in the context of subsection 152-20(1) extends to legally enforceable debts due for payment and to presently existing obligations to pay either a sum certain or ascertainable sums and does not extend to contingent liabilities, future obligations or expectancies, does not fully accord with the Court's judgment...The Commissioner will review the TD 2007/14 in light of the Full Federal Court decision."


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