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Edited version of your private ruling
Authorisation Number: 1012433261044
Ruling
Subject: CGT asset - date of acquisition
Question 1
Is the date of acquisition for capital gains purposes for the purchase of your franchise the date of the franchise agreement?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts and circumstances
You entered into a franchise agreement some time during the relevant financial year by signing a franchise agreement.
Your business did not commence operations until the subsequent financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 109-5
Reasons for decision
Subsection 109-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that:
In general, you acquire a *CGT asset when you become its owner. In this case, the time when you *acquire the asset is when you become its owner.
If you acquire a capital gains tax (CGT) asset as a result of a CGT event, that is, disposal of an asset, certain rules determine when you are taken to have acquired the asset. These rules depend on which event is involved.
If you entered into a contract to purchase a CGT asset, the time of acquisition is when you enter into the contract. In your case, you entered into a franchise agreement, and gained certain rights and licences as a franchisee, which are your CGT asset. Although you commenced the operation of your business at a separate time, the business is a separate CGT asset to the rights and licences granted under a franchise agreement.
Therefore the acquisition date is the date that you entered into the franchise contract, that is, the date you signed the contract.
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