Private ruling: Capital gains tax
Published: June 2015
Ruling period: 1 July 2009 to 30 June 2014
Date scheme commenced: 1 July 2009.

Ruling: Question and answer: | Is the first element of the cost base of your overseas CGT assets the market value of those assets on the day you obtained your permanent resident visa? | Yes.

Relevant facts and circumstances: You came to Australia under a temporary resident visa. You were a citizen of a foreign country when you came to Australia. You obtained a permanent resident visa several years later. When you obtained your permanent resident visa you owned shares in a foreign company, as well as several residential properties located outside of Australia (your overseas CGT assets). You acquired your ownership interest in all your overseas CGT assets on or after 20 September 1985.

Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 855-45 | Income Tax Assessment Act 1997 - Section 768-950 | Income Tax Assessment Act 1997- Section 768-955

Reasons for decision: Summary: Special rules apply to determine the first element of the cost base of capital gains tax (CGT) assets located overseas that are owned by individuals who come to Australia and become Australian residents for taxation purposes. As a general rule, the first element of the cost base of a CGT asset that is held outside of Australia by a person who comes to Australia and becomes an Australian resident for taxation purposes is the market value of the asset on the day they become an Australian resident for tax purposes. However, this rule does not apply to individuals who come to Australia and become residents of Australia for taxation purposes but who are also temporary residents for taxation purposes. In this case, if the individual remains a resident for taxation purposes and later obtains permanent residency of Australia, then the first element of the cost base of their overseas CGT assets is the market value of those assets on the day the person becomes a permanent resident of Australia. You have an ownership interest in CGT assets located overseas and you acquired your ownership interest in all those assets on or after 20 September 1985. You came to Australia under a temporary visa and later obtained a permanent residence visa. For CGT purposes, the first element of the cost base of your overseas CGT assets will be the market value of those assets on the day you obtained your permanent resident visa.