Schedule 3

Tax benefits and capital gains tax

Purpose

4.1        Schedule 3 amends the Income Tax Assessment Act 1997 to provide a general exemption from capital gains tax (CGT) 'for capital gains arising from a right or entitlement to a tax offset, deduction or similar benefit'.[1]

4.2        The Hon Mr Chris Bowen, Assistant Treasurer, noted in his second reading speech:

A highly technical interpretation of the income tax law may result in a capital gain or capital loss arising to taxpayers who have a right to receive an urban water tax offset on the satisfaction of the right. This amendment will put beyond doubt that a capital gain or capital loss would not arise for taxpayers in such circumstances, or in other circumstances where taxpayers have a right or entitlement to a tax offset, deduction or other taxation benefit.[2]

4.3        The treatment extends to taxpayers 'who have the right to receive other types of tax offsets, deductions or other taxation benefits', for example the right to receive a reduction in land tax.[3]

4.4        The measure applies to CGT events in the 2009–10 income year and onwards.[4]

Financial impact

4.5        There should be no financial impact or compliance costs.[5]

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