CGT relief errors not dire

Capital gains tax relief

Errors made at the time an SMSF elected to use the capital gains tax relief provisions can now be corrected, a technical expert has said.

A technical expert has assured advisers that errors made when deciding to use the capital gains tax (CGT) relief provisions three years ago can be addressed without too much difficulty if clients now want to claim the relief.

During a concurrent session at last week’s SMSF Association 2020 National Conference on the Gold Coast, Accurium head of technical services Melanie Dunn noted there are solutions to common situations regarding this issue, one being the misplacement of CGT relief documentation.

“What about if the client says I can’t find the documentation from back at 30 June 2017? What does that mean for me claiming capital gains [tax relief] today? The first thing we would do is check the tax return and the CGT schedule for the year 2016/17,” Dunn said.

“That’s going to give us a really good clue as to whether CGT relief was applied at the time. We can look at [label] 11G of the tax return for 2016/17 as it will tell us whether CGT relief was applied. We can look at the CGT schedule to identify if there were any total deferred gains.”

With regard to claiming CGT relief incorrectly at 30 June 2017, she noted there are actions that can be taken to address this issue as well.

“It could be that the fund elected to claim capital gains tax relief when it actually wasn’t eligible for it. So in this case you might need to amend the 2016/17 tax return,” she said.

Further, she pointed out while the election for CGT relief is irrevocable, it does not mean errors of this nature cannot be corrected now. In fact, she predicted the ATO would probably look upon an amendment to the tax return in these circumstances favourably considering the relief should not have been claimed in the first place.

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