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Tuesday, 25 November 1986
Page: 3722

(Question No. 4842)


Dr Watson asked the Treasurer, upon notice, on 23 October 1986:

Will a taxpayer who owned land prior to 19 September 1985 and who now grants a right to another person to taken timber from that land for a lump sum which is not a royalty under the Income Tax Assessment Act, be subject to capital gains under section 160m (7) of the Act; if so, how will the tax be calculated.


Mr Keating —The answer to the honourable member's question is as follows:

Timber standing on land is to be treated as part of the land for the purposes of the capital gains provisions. Where the owner of the land allows another person to take the timber and the payment received for the timber is not a royalty, the Commissioner of Taxation considers that the payment is made for a part disposal of the particular asset. This means that where the land was acquired before 20 September 1985, the receipt would not give rise to a capital gains tax liability.