The judgment relates to a recent case where the Federal Court held that the ATO has an unlimited time period to amend tax assessments if an asset was sold under a contract that was signed in one financial year and settled in the next.

Wookey warns that as it stands, this decision means that taxpayers cannot have certainty about their capital gains tax (CGT) affairs from the 1998/1999 financial year onwards.

"With the exponential growth in property investment in recent years and the common use of multiple-month settlement terms, there are likely to be many taxpayers whose property sales straddle the end of a financial year," he observed.

"To give an example, a property sale contract signed in May, with a 60-day settlement term, would not be completed until July - that is in the following financial year - and therefore could be affected by this decision," he explained.

Wookey cautioned that this is traditionally the time of year when individuals, with an increased focus on their tax affairs, dispose of old records. He advises that during the appeal process and before the final judgment is handed down, taxpayers should retain documentation indefinitely.

According to Wookey, this will protect an individual if the ATO seeks to challenge a prior year's capital gain calculation. He said that it is also important as the ATO can deny deduction claims, even when calculating the CGT cost base of an asset, where the costs cannot be fully substantiated.

"In extreme situations, a property investor could be assessed on gross sale proceeds received without any allowance for the cost of the property sold," warned Wookey.

"But it is not just property investors who could be affected by this decision. Vendors of any assets, such as shares and businesses, where the settlement period crosses from one financial year to the next are potentially exposed," he added.