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Edited version of private advice
Authorisation Number: 1012640366852
Ruling
Subject: Capital gains tax
Question
Did a capital gains tax (CGT) event occur in the 2012-13 financial year in relation to the shares?
Answer
Yes.
This ruling applies for the following period
Year ending 30 June 2013
The scheme commences on
1 July 2012
Relevant facts and circumstances
Your relative owned shares in a company.
You have power of attorney over your relative's finances.
Your relative asked you to sell the shares. You considered at the time that your relative was still of sound mind to sign paperwork, but past managing their affairs such as share trading.
You contacted an expert to find out the best way to sell the shares.
They recommended that your relative set up an online trade account.
The other suggestion they made was to get them to sign the shares over to you and then you could dispose of them via your own online account.
A standard transfer form was completed and the shares were transferred into your name. You did not pay any money for the shares.
You sold the shares and received the proceeds in the 2012-13 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 120-20
Reasons for decision
Under section 120-20 of the Income Tax Assessment Act 1997 (ITAA 1997), an entity will make a capital gain or a capital loss if a capital gains tax (CGT) event happens to a CGT asset.
CGT event A1 occurs when you dispose of a CGT asset. You are considered to have disposed of a CGT asset if a change of ownership occurs from you to another entity because of some act or event or by operation of law. The capital gain or capital loss is made at the time of the event (section 104-10 of the ITAA 1997).
In this case, your relative owned shares in a company. You and your relative completed a transfer form and you became the legal owner of the shares. In the 2012-13 financial year, you disposed of the shares and a CGT event occurred. Therefore, you are required to calculate your capital gain (or loss) to include in your income tax return for the 2012-13 financial year.
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