Foreign resident CGT withholding: early recognition of tax credit
In other words, an embarrassing deficiency in legislation has been corrected.
The Commissioner has made a determination to modify the time at which the vendor is entitled to a tax credit in respect of an amount withheld under the foreign resident CGT withholding rules.
The modification, applicable for transactions entered into on or after 1 July 2016, ensures that, where a settlement period for a transaction covers more than one income year for the vendor, the credit entitlement will be available in the same year as that in which the transaction giving rise to the payment to the ATO is recognised for tax purposes for the vendor.
In other words, an embarrassing deficiency in legislation has been corrected. This is a positive new principle that allows the Tax Commissioner to remedy “bad rules” promptly.