ATO Interpretative Decision
ATO ID 2002/743 (Withdrawn)
Capital gains Tax
Capital gains tax - time of disposal where there is a dissolution of a club and acquisition of that club's assets by another club from the liquidatorFOI status: may be released
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This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 12 March 2010
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
What is the time of disposal of a CGT asset under CGT event A1 pursuant to section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) where Club A is to be dissolved and its assets are to be transferred by the liquidator to Club B?
Decision
The time of disposal for CGT under section 104-10 of the ITAA 1997 is when the liquidator executes an instrument of transfer in respect of the club A's CGT asset to Club B.
Facts
Club A and Club B are companies limited by guarantee.
Both clubs are registered under the Registered Clubs Act 1976 (NSW).
Club A is to amalgamate with Club B pursuant to subsection 17A(1) of the Registered Clubs Act 1976 (NSW) which states, at paragraph (b), that a reference to the amalgamation of 2 or more registered clubs is a reference to an amalgamation affected by the continuation of one of those clubs and the dissolution of the other club or clubs.
There is a Memorandum of Understanding (MOU) reflecting a view to amalgamate the clubs pursuant to the provisions of the Registered Clubs Act 1976 (NSW).
The members of both clubs voted at general meeting to amalgamate.
Club A was placed in voluntary liquidation and the liquidator will transfer the club's assets to Club B.
Reasons for Decision
For the purposes of subsection 104-10(3) of ITAA 1997, CGT event A1 happens at the time the liquidator of the club disposes of club A's CGT asset. Subsection 104-10(2) of the ITAA 1997 provides that disposal occurs when there is a change of ownership. The change of ownership will occur when the liquidator of Club A executes an instrument of transfer to Club B in respect of a CGT asset of Club A. This results in a transfer of both legal and beneficial interest in that asset to Club B.
The only document that refers to the acquisition of assets by Club B is the MOU. This agreement merely reflects a view to amalgamating the two clubs pursuant to the provisions of the Registered Clubs Act 1976 (NSW). It is not a contract for the purposes of paragraph 104-10(3)(a) of the ITAA 1997 through whose operation the assets change ownership.
As there is no contract for the disposal of club A's assets, paragraph 104-10(3)(b) of ITAA 1997 applies. It provides that the time of disposal is when the change of ownership occurs, that is, at the time the club liquidator transfers the CGT asset under an instrument of transfer to Club B.
Date of decision: 15 May 2002Year of income: Year ending 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
subsection 104-10(1)
subsection 104-10(2)
paragraph 104-10(3)(b)
paragraph 17A(1)(b) Related ATO Interpretative Decisions
ATO ID 2002/744
Keywords
Capital gains
Capital gains tax
CGT event A1-disposal of a CGT asset
Non profit companies
Liquidation
Time of CGT event
Voluntary liquidation
ISSN: 1445-2782
| Date: | Version: | |
| 15 May 2002 | Original statement | |
| You are here → | 12 March 2010 | Archived |