find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Lawyer flags identification traps with CGT relief

Lawyer flags identification traps with CGT relief


SMSF trustees who are unable to distinguish between the different tranches of shares they own in one company may face limitations with how the CGT relief can be applied, warns an industry lawyer.

DBA Lawyers director Daniel Butler said where an SMSF trustee has shares in one particular company but increases the amount of shares they own in that company over a period of time, each tranche of shares will have a different cost base.

Where an SMSF trustee is eligible for the CGT relief and wants to apply it, they may need to identify between these different tranches of shares, as they may want to elect to apply the relief to some tranches and not others.

“For instance, if you make an election in respect of a share that has a loss, if you were segregated you’d lose that loss,” Mr Butler explained.

“If you’re unsegregated then you don’t lose your loss, but you bring to account a certain amount of the upside. You bring to account the notional capital gain to the extent that you are not exempt under the proportionate CGT transitional relief.”

In Tax Determination TD 33, Mr Butler said the ATO states that where “a disposal of shares occurs and those shares are able to be individually distinguished, e.g. by reference to share numbers or other distinctive rights or obligations attached to them, those shares are identifiable; their date of acquisition and cost base will be a matter of fact”.

However, where unidentifiable shares have been disposed of, Mr Butler said the ATO will take a ‘first in, first out’ position.

“So in the absence of identification, the ATO would normally expect a first in, first out position, that is, the ones that were first acquired were the first ones disposed of,” he said.

Taxpayers can only vary this presumption by having accurate and distinct records, he said.

While it may be easy to find information on acquisition dates and cost bases for the 40 per cent of SMSFs that were set up on a real-time system that receives data feeds, it may be more difficult for the other 60 per cent of SMSFs.

For the the 60 per cent of funds that don’t have access to this ready data, it will come down to what information is stored. Some accountants don’t have sophisticated systems and they may have to go scurrying through old paper records and recompile that accounting system, he said.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Lawyer flags identification traps with CGT relief
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Scales of Justice
Aug 16 2017
Urgent criminal law reforms can prevent ‘unwarranted acquittals’
Concerns about unfair prejudice arising from the use of tendency and coincidence evidence are mispla...
Aug 15 2017
Press Control-S on your firm
Promoted by BHL Software It’s now a truism that when your IT systems stop working, so does you...
Aug 15 2017
The Importance of Leadership Skills for Aspiring Lawyers
Promoted by LHD Lawyers Even the most prominent lawyers of our age (or ages past, for that matter...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...