ATO Interpretative Decision

ATO ID 2003/451

Income Tax

CGT: personal use assets - gold nuggets
FOI status: may be released

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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 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1936
subsection 160B(1)

Income Tax Assessment Act 1997
   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

Related ATO Interpretative Decisions
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

Siebel/TDMS Reference Number: 3201739

Business Line: Public Groups and International

Date of publication: 20 June 2003

ISSN: 1445-2782

history

	Date:	Version:
You are here	30 May 2003	Original statement
	29 August 2019	Archived

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