ACCA Advanced Taxation (ATX) Practice Exam

What is the adjustment period for qualifying non-current assets under Capital Gains Stabilization (CGS)?

1. 5 years for all assets

2. 10 years for all assets

3. 1O years for Land and Buildings, 5 years for Computers

4. 5 years for non-current assets and 10 for others

The correct answer is: 1O years for Land and Buildings, 5 years for Computers

The adjustment period for qualifying non-current assets under Capital Gains Stabilization (CGS) is indeed linked to the specific types of assets involved. This option highlights the distinct treatment for different categories of assets. For land and buildings, a longer stabilization period of 10 years is appropriate due to the inherent nature of these assets, including their potential for appreciating in value over a longer time frame and the complexities involved in their sale or transfer. In contrast, computers and similar technological assets typically have shorter lifespans and faster rates of obsolescence, justifying a stabilization period of only 5 years. This differentiation allows businesses to correctly assess their capital gains tax liabilities based on the nature of the assets they hold, ensuring appropriate tax relief and encouraging investment in both stable, long-term assets like real estate and rapidly evolving technology. The other options do not accurately represent this nuanced approach to asset classifications and their corresponding adjustment periods, making the selection of the correct answer essential for understanding the CGS regulations.