ATO Will Apply New CGT Rules Retroactively for Four Years, Limiting Impact on Most Taxpayers

The Australian Taxation Office will not apply newly proposed capital gains tax rules to transactions older than four years, despite the law being retroactive to December 2006. The ATO said in a note that it would not generally review disposals older than four years, even if the legal period for review remained open. This means most taxpayers who sold assets before 2020 will not face backdated CGT assessments. The government’s draft legislation expands the definition of 'real property' to include additional assets, subjecting foreign investors to CGT when they sell them. The ATO clarified that the change aligns with its current administrative approach and that it would not seek to re-open settlements that were intended to be final, except in rare exceptions. The ATO also noted that the retroactive changes, if enacted, would primarily affect taxpayers already under review or those likely to be reviewed in the future.