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Wednesday, 11 December 2002
Page: 7726


Senator COOK (2:18 PM) —My question is to Senator Coonan, the Assistant Treasurer and Minister for Revenue. Does the minister recall her statement in parliament last week that her family's Pittwater property has `no liability for capital gains tax, either now or when the property is sold'? How does the minister explain this statement, given today's published advice from the ATO that the property would attract tens of thousands of dollars in capital gains tax if it were sold and if it had not been used as a principal place of residence? Isn't it the case that subsection 108-55(2) of the tax law specifically means that the house is not CGT exempt, as it was built some nine years after the introduction of capital gains tax? Isn't this why the false electoral enrolment actually occurred: to try and derive a huge capital gains tax exemption on the increase in the value of the Pittwater house by way of nominating it as a principal place of residence?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Cook, for the opportunity to answer this question. Reports in this morning's Sydney Morning Herald concerning capital gains tax on a property at Clareville are factually incorrect, misleading and defamatory. The assertion that there is a contradiction is based on a series of assumptions and predictions as to events which have simply not occurred. I have advice from Mr Michael D'Ascenzo, Second Commissioner of Taxation, in relation to this so-called published advice to which Senator Cook has referred. I will read from the letter and I will also table it. He says:

We have no knowledge of any advice given to `The Sydney Morning Herald' on the matter of the Capital Gains Tax ... implications of your husband's property at Pittwater.

By law, ATO staff are prohibited from commenting on individual taxpayers.

I understand that `The Sydney Morning Herald' contacted our media unit for general background for an article on the operation of the CGT regime. That advice, being general in nature, was not related to any particular property or circumstance.

... The media unit does not have access to any information about individual taxpayers.

... ... ...

The application of CGT to a particular circumstance or transaction depends on an analysis of the full facts.

... ... ...

The amount of any CGT liability that may result from the disposal of property (including post 1985 improvements) by a taxpayer would depend on a range of factors including the amount of gain attributable to the improvements and the cost base of the improvements.

However, a CGT event may not occur for example, if the property was transferred to beneficiaries under the terms of a testamentary trust. A CGT event would occur on the subsequent disposal of the property by the beneficiaries, the amount of CGT depending on a range of factors.

Mr D'Ascenzo goes on to say:

As can be gleaned from the above, that the ATO has not provided any advice to `The Sydney Morning Herald' that relates specifically to the Pittwater property. The application of the CGT to a particular event will depend on the relevant facts and circumstances.

I table the letter. So it is very clear that there is no contradiction between my position and the position of the tax office. It is true to say that the land is not subject to capital gains tax because it was owned prior to 1985. The question of whether improvements to the property would attract a capital gains tax is in fact a complex issue, as set out in the letter and referred to in my answer to Senator Cook on 4 December. To make it perfectly clear, at the time I answered the question on 2 December, to which the senator refers, I did not have in mind any implications that may arise from improvements to the property since 1985. As my answer to Senator Cook shows, the following day I was aware of hypothetical events that might give rise to a capital gains tax event and was not giving a legal opinion. As my answer to Senator Cook shows, I clearly did not mean to mislead the Senate and, as the tax office has said in its letter, the application of capital gains tax to a particular circumstance or transaction depends on an analysis of the full facts. My legal advisers will be in touch with the Sydney Morning Herald concerning its claims in that article. (Time expired)


Senator COOK —Mr Deputy President, I ask a supplementary question. I note that nothing in the tax office letter that has been quoted by the minister establishes that there is anything in the Sydney Morning Herald article that is incorrect. Isn't it the case that taxation determination 51, issued by the Australian Taxation Office, a body for which the minister has ministerial oversight, spells out the factors that are involved in determining whether a property is a main residence for capital gains tax purposes? Isn't it the case that taxation determination 51 lists as one of the criteria where a person is enrolled on the electoral roll? Isn't this the real reason why the false electoral enrolment actually occurred—to try and derive a huge capital gains tax exemption on the increase in the value of the Pittwater house?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —So far as I know, there has been absolutely no false enrolment. I have tabled a statement which repudiates the assertion made by Senator Cook that there is published advice from the ATO— which is dead wrong. I have said that my attorneys will be in touch with the Sydney Morning Herald concerning that matter and, I might add, also with 2UE, who published a scurrilous interview with the member for Werriwa. No doubt the member for Werriwa will also receive some interesting Christmas reading.