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Term connection with Australia, is strictly in line with 'capital asset' and the application of the Capital Gains Tax Act to non residents on these assets.

This covers basically all assets within Oz, yet the way that the share markets works on a global scale, it is a little impossible for Carmody to tax every single transaction, as he does not know the worth nor net gain or loss of each transaction (although one suspects that he is trying very hard to tie in the share trading activities of CHESS through to TFN's so 'he does know' and can watch all taxpayers profits and losses **).

Connection within Oz means a BHP, NDY etal listed on the ASX whose principle activities are in Oz and that connection remains through the management and head office.

Therefore, an exception is made to share trades unless they are in excess of 10%. Why 10% ... it has to do with the 'control factor' and ability to monitor non residents transactions worldwide.

A public company can be controlled with less than 10% of the issued capital of a company [say de Crespney (?) in NDY] however, anything above 10% has to be reported to the ASX and can be easily monitored by the ATO.

It is far easier to monitor these and takes less resources, when we are looking at a global trading situation with those non resident shareholders that invest in more than 10% of listed companies (which as stated previously must declare and report shareholdings under the ASX guidelines).

Take Conrad Black and his involvement in Fairfax. Whilst a Canadian resident his sale of his interest in Fairfax, would have resulted in a CGT bill being directed his way (one presumes in this instance that a gain was made) under the ITAA, as it stands. I doubt that he could avoid payment and the scenario raises interesting parallels.

Hence non residents have it on a trust basis to report to their own tax authority.

(**) The hobby routine will not work as a means of not declaring capital profits in Oz, as the share is an asset and CGT applies regardless (to answer the residents query).
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