ATO Interpretative Decision
ATO ID 2003/451 (Withdrawn)
Income Tax
CGT: personal use assets - gold nuggetsFOI status: may be released
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This ATO Interpretative Decision is withdrawn because the 'Reasons for Decision' may be misleading. Taxation Determination TD 2014/26 contains guidance on whether an asset is kept or used mainly for your personal use or enjoyment.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are gold nuggets 'personal use assets' under subsection 108-20(2) of the Income Tax Assessment Act 1997 (ITAA 1997) if a taxpayer has collected them pursuing a hobby and not in the course of carrying on any business or profit making activity?
Decision
Yes. Gold nuggets are 'personal use assets' under subsection 108-20(2) of the ITAA 1997 if a taxpayer has collected them pursuing a hobby and not in the course of carrying on any business or profit making activity.
Facts
The taxpayer fossicked for gold nuggets as a hobby while camping and occasionally found some nuggets. The taxpayer held a fossicking licence.
This activity did not amount to any business or profit making activity being carried on by the taxpayer but was merely a pastime enjoyed by the taxpayer.
Reasons for Decision
A 'personal use asset' includes a CGT asset, except a collectable, that is used or kept mainly for your (or your associate's) personal use or enjoyment: paragraph 108-20(2)(a) of the ITAA 1997. Gold nuggets are a form of property and accordingly are CGT assets: section 108-5 of the ITAA 1997.
In Favaro v FC of T (1996) 34 ATR 1; 96 ATC 4975 the Federal Court held that Italian currency which was converted to Australian currency was not a 'personal use asset' under the equivalent provision of the Income Tax Assessment Act 1936 (ITAA 1936). The Court accepted the Commissioner's submission that 'the expression "personal use" is used in s 160B of the ITAA in contradistinction to use for business or profit making purposes' (Subsection 160B(1) of the ITAA 1936 was rewritten as subsection 108-20(2) of the ITAA 1997).
The word 'contradistinction' means distinction by contrast or opposition (The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne). Therefore, an asset that is not used for business or profit making purposes is, by default, used or kept mainly for personal use and enjoyment. The two categories are mutually exclusive.
In this case, the taxpayer collected the gold nuggets pursuing a hobby and not in the course of carrying on any business or profit making activity. As such, it is considered the gold nuggets are used or kept mainly for the personal use and enjoyment of the taxpayer and are therefore personal use assets under paragraph 108-20(2)(a) of the ITAA 1997.
Date of decision: 30 May 2003Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
subsection 160B(1)
section 108-5
subsection 108-20(2)
paragraph 108-20(2)(a)
Case References:
Favaro v FC of T
(1996) 34 ATR 1
96 ATC 4975
ATO ID 2002/795
Other References:
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne
Keywords
Capital gains tax
CGT assets
Collectables
Personal use assets
ISSN: 1445-2782
| Date: | Version: | |
| 30 May 2003 | Original statement | |
| You are here | 29 August 2019 | Archived |