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The Board of Taxation will now undertake a review of capital gains tax rollover rules in a bid to simplify the provisions while maintaining their practical effect.
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CGT rollovers set for Board of Taxation review
16 December 2019
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9 minute read
Announced by Assistant Treasurer Michael Sukkar, the Board of Taxation has been requested to consider practical ways to simplify existing rollovers.
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Taxation law currently allows certain CGT events to occur without crystallising liabilities to tax in circumstances where it is considered appropriate for the CGT liability to be deferred until a later time.
According to the board, over time, the provisions catering for these circumstances have multiplied to the point where navigating the law is difficult.
The board will now identify and evaluate opportunities to rationalise the existing CGT rollovers and associated provisions into a simplified set that has a substantially similar practical effect, but are easier to use and interpret.
It will consider two main categories of rollovers, namely rollovers where there is no change in underlying economic ownership after the CGT event, and rollovers where the disposal is involuntary.
The terms of reference for the review will allow the board to suggest additional categories of rollovers, but in doing so, it should ensure that any proposals that defer capital gains tax encourage the active use of assets in the economy and, consequently, support the payment of income tax on profits generated from using those assets.
While simplifying the process of giving advice on rollovers, the board’s recommendations should protect the tax system against the risk that any CGT deferral becomes permanent, and have regard to the overall revenue cost of the system of rollovers and the integrity of the tax system.
The working group composed of board members Craig Yaxley, Ann-Maree Wolff and Mark Pizzacalla, as well as representatives from the tax profession, academia, Treasury and the ATO, will need to report back to the government by 30 November 2020.
A series of in-person roundtable consultations will be held on the following dates in 2020:
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