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Ruling
Subject: CGT - Shares - Pre-CGT Acquisition
Question
Will any capital gain or capital loss made on the disposal of a parcel of your shares be disregarded?
Answer
Yes
This ruling applies for the following period:
Year ending 30 June 2013.
The scheme commenced:
Prior to 20 September 1985
Relevant facts and circumstances
While you were a non-resident, your sibling had power of attorney over your Australian affairs.
Prior to 20 September 1985 a number of shares were purchased on your behalf as evidenced by the contract note from your broker. The original share certificate relating to these shares was misplaced.
Prior to 20 September 1985 a parcel of shares were sold on your behalf as evidenced by the contract note from your broker.
Prior to 20 September 1985 another parcel of shares were purchased on your behalf as evidenced by the share certificate provided.
A replacement certificate for the remaining shares of the original parcel purchased prior to 20 September 1985 was issued and dated after 20 September 1985.
You have confirmed there have been no other transactions relating to your holding of these shares other than listed above.
For the purpose of this ruling you will dispose of the remaining shares of the original parcel purchased prior to 20 September 1985 at sometime in the future.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 108-5
Income Tax Assessment Act 1997 Section 109-5
Reasons for decision
CGT event A1 will happen when you dispose of a CGT asset. Shares are CGT assets.
You make a capital gain if the capital proceeds from the disposal are more than the asset's cost base. You make a capital loss if those capital proceeds are less than the asset's reduced cost base.
A capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985 (pre-CGT asset). Generally, you acquire a CGT asset when you become its owner.
In your case, CGT event A1 will happen when you dispose of the remaining shares of the original parcel purchased on XX. Although you have misplaced the original share certificate you have provided a copy of the contract note confirming the purchase date. As this parcel of shares was acquired before 20 September 1985 these shares are pre-CGT assets and any capital gain or capital loss made on the disposal of this parcel of shares will be disregarded.
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