The Tax Office has on Wed 16.4.2014, issued a 3rd Addendum to Taxation Determination TD 2007/14 (CGT: small business concessions: what “liabilities” are included in the calculation of the ‘net value of the CGT assets” of an entity in the context of s 152-20(1) of the ITAA 1997?).
The Addendum, issued as TD 2007/14A3, reflects the Commissioner’s views following the decision of the Full Federal Court in FCT v Byrne Hotels Qld Pty Ltd (2011) 83 ATR 261 in which the Court ruled that “contingent liabilities” were relevant to the net asset value calculation under s 152-20(1), but only where the contingency is enforcement of existing legal or equitable rights or the obligation is not “truly contingent” in the sense of being “uncertain as both a theoretical and practical matter”.
As a result, the Addendum removes references in TD 2007/14 to unbilled expenses or expenses not yet due (in Example 1 and para 20).
The Addendum further states that the Commissioner is of the view the decision does not stand for any principle that contingent liabilities in general are “liabilities” for the purpose of s 152-20(1).
The Addendum applies to years commencing both before and after its date of issue.
[LTN 73, 16/4/14]