Question:
CGT – Speculative Shares
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Question: An article in a recent newspaper reported that shares such as speculative mining shares purchased for resale at a gain are not eligible for the CGT discount. It went on to state that the discount is only available for shares delivering both income and capital gains. Is that correct? Was this intended? I am sure this would not be practised by taxpayers or tax agents.
Answer: Gains realised in the course of carrying on a business of investing in profit or trading in shares are income according to ordinary concepts and hence not eligible for the CGT discount. Gains arising from individual transactions of a profit making nature may also be treated as revenue gains. A relevant section concerning this (Section 15-15 of the 97 Tax Act) only relates to assets acquired prior to the commencement of CGT, however in the Myer Case it was held that profit arising from an isolated business or commercial transaction would be ordinary income if the purpose or intention was to make a profit.
In connection with the acquisition of shares, there may be some doubt as to the true intention of the taxpayer, the length of time intended to retain the shares and whether the taxpayer actually acquired the shares with a view to selling them or with a view to holding pending successful discovery and production by the mining company.
The individual taxpayer’s own history of transactions may assist in determining the result.In the meantime, as you say, most taxpayers will simply return any gains under the CGT rules and claim any applicable discount.
