Private ruling: CGT - Shares - Becoming an Australian resident
Published: June 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: After 1 December 2011

Ruling: Q1: Can you elect to use the original cost as the cost base for your shares? | A1: No.

Relevant facts and circumstances: You acquired Australian shares between 2007 and 2011 while you were a non-resident. You became an Australian resident for tax purposes again some time during the 2012 income year. Your shares are not taxable Australian property. You have not sold your shares.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 855-45

Reasons for decision: Summary: If an individual or company becomes an Australian resident, special cost base and acquisition rules apply in respect of each CGT asset owned by the taxpayer just before becoming a resident. However, these rules do not apply to pre-CGT assets or assets that are taxable Australian property. The first element of the cost base and reduced cost base of an asset held at the time the taxpayer becomes a resident is its market value at that time. The taxpayer is treated as having acquired the asset at the time of becoming a resident. As a result, the taxpayer will only be eligible for the CGT discount if the asset is held for at least 12 months from the time of becoming a resident, even though it was actually owned before that time. In your case, you acquired a number of shares (CGT assets) between 2007 and 2011, while you were a non-resident. As your shares are not pre-CGT or taxable Australian property, the first element of the cost base and reduced cost base of your shares is their market value on the day you became a resident. You are also taken to have acquired your shares on that date when considering your eligibility for the CGT discount if you decide to sell your shares. Therefore, due to the operation of the special cost base and acquisition rules for an individual who becomes an Australian resident, you cannot choose any other method, including original cost, to calculate the cost base of your shares.

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