Taxation Determination TD 94/89







This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). | 1. Where the contract is settled in a later year of income, a taxpayer is required to include a capital gain or loss in the year of income in which the contract is made, not in the year of income in which the contract is settled. | 2. Where land is disposed of under a contract, subsection 160U(3) of the Income Tax Assessment Act 1936 deems the disposal to have taken place when the contract is made (see Note (1)). | 3. However, a taxpayer is not required to include any capital gain or loss in the appropriate year until an actual change of ownership occurs. Settlement effects a change of ownership and a disposal (subsection 160M(1)) which then triggers the operation of subsection 160U(3). When settlement occurs, the taxpayer is then required to include any capital gain or loss in the year of income in which the contract was made (subsection 160U(3)). If an assessment has already been made for that year of income, the taxpayer may need to have that assessment amended. | 4. Although it is not required, a taxpayer who before settlement, lodges his or her return for the income year in which the contract was made may, for convenience, at that time include in the return any (net) capital gain arising from the sale of the land or offset any capital loss arising from the sale of the land against a capital gain. | 5. Where an assessment is amended to include a net capital gain, and a liability for interest arises under subsection 170AA(1), the remission of interest will be dealt with in each case on its own merits. We would expect, however, that the discretion in subsection 170AA(11) would ordinarily be exercised to remit the interest in full where requests for amendment are lodged, and where relevant, self-amendments are made, within a reasonable time after the date of settlement. In most cases, we would consider a period of one month after settlement to be a reasonable period. | Example: Commissioner of Taxation 24/11/94 | Previously issued as Draft TD 94/D92


Related rulings: TD 23 (equivalent to CGT23) TR 94/29
Legislative references: ITAA 160M(1) ITAA 160U(3) ITAA 170AA(1) ITAA 170AA(11)
Case references: Case 24/94 94 ATC 239
Subject references: contract disposal of land time of disposal