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Wednesday, 4 December 2002
Page: 7148

Senator COOK (2:33 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Can the minister confirm that, under the Taxation Office capital gains tax guidelines, event E7, relating to the disposal to a trust beneficiary of an end capital right, is designed to address circumstances where a beneficial interest changes to a legal interest? Can the minister also confirm that, while an E7 event in which a pre-capital gains tax asset is disposed of will not trigger a tax liability, it will start the running of the clock on a capital gains tax liability from that date until another event, such as a sale?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Cook, for the question. It does, of course, require a legal opinion, which I am certainly not going to provide.

Senator COOK —It does not require a legal opinion at all; it could be an opinion from an accountant or anyone else familiar with the act, including the minister who has the job to administer the act. I ask a supplementary question—and maybe the minister can hazard an answer. Can the minister also confirm that the capital gains tax law provides that major capital improvements to an asset which was acquired before 20 September 1985, such as the demolition of an old house and the construction of a new one on the same site, will actually be subject to capital gains tax?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —The same position applies; I am not going to provide some commentary that will provide a legal opinion on hypothetical events. We know what the Labor Party's policy was on capital gains tax—and that was to start the clock running on every single asset since about 1998.