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11 Nov 11 NTLG CGT & Losses Sub-committee

This Wednesday, 9 November 2011, Mark Molesworth FTIA (BDO) and Tax Counsel, Deepti Paton ATIA attended a meeting of the NTLG CGT & Losses Sub-committee. At this meeting, participants discussed a number of issues, including:

  • The finalised tax determination on the incorporation of professional practices (TD 2011/26) and associated draft TDs (TD 2011/D9 and D10) issued recently. Participants discussed the need for additional ATO guidance on the incorporation of professional practices, including in relation to how to calculate the “market value” of shares where the relevant practice company holds assets other than goodwill, and in relation to dealings in shares where one of the parties to the transaction is not a natural person. The ATO agreed to explore the need for additional ATO guidance on such topics in consultation with members.
  • When an unpaid present entitlement (UPE) becomes a ‘payment’ for the purposes of CGT event E4. The ATO is of the view that the appropriate tax outcome in these circumstances would depend on the manner in which the UPE was treated/dealt with and has asked for some sample trust deeds under which UPEs may be created in order to consider the issue in more detail. If you are able to assist us by providing such a deed, please do not hesitate to email us at Tax Policy.
  • The ATO provided  members with an updated report on CGT & losses compliance. Specifically, the ATO noted that;
      • Losses incurred as well as utilised had increased in the 2009-10 income year.
      • The ATO continued to use data matching techniques to verify the appropriate reporting of share and property transactions. Over 5,000 letters were sent to taxpayers that appear to have under-reported capital gains.
      • Pre-lodgment awareness letters will be sent to a number of taxpayers that have incurred losses for the first time.
      • The ATO continues to undertake efforts to ensure compliance with loss transfer and/or utilisation requirements especially in relation to consolidated groups and non-residents.

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