On 19 December 2001, the Australian Taxation Office (ATO) issued a ruling entitled "Income tax and capital gains tax: capital gains in pre-CGT tax treaties". In the ruling, the ATO concluded that Australia's taxation of capital gains under the Income Tax Assessment Act 1936 is not affected in any way by Australia's pre-CGT treaties (concluded before 20 September 1985, when capital gains became taxable in Australia). This article examines the ruling and points out the problems with the ATO's reasoning.