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Edited version of your written advice
Authorisation Number: 1012701149293
Ruling
Subject: Foreign exchange
Questions and Answers:
1. Was there a foreign exchange event for you as a result of the withdrawal on date B from your spouse's foreign currency bank account?
No
2. Was there a capital gains tax event for you as a result of the withdrawal on date B from your spouse's foreign currency bank?
No
This ruling applies for the following period:
Year ended 30 June 2014
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
You and your spouse are residents of Australia for tax purposes.
After becoming Australian residents, on date A in the 2012-13 income year you and your spouse transferred an amount in AUD from your AUD joint savings bank account to your spouse's USD account.
On date B in the 2013-14 income year an amount was transferred from your spouse's USD account back to your joint AUD account.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20.
Income Tax Assessment Act 1997 Division 775.
Income Tax Assessment Act 1997 Paragraph 775-15(2)(a)
Reasons for decision
Foreign exchange gains and losses
Division 775 of the Income Tax Assessment Act 1997 (ITAA 1997) applies to include a forex realisation gain you make as a result of a forex realisation event.
The Division is intended to include in your assessable income any forex gain or loss you make from an obligation to pay money or a right to receive money.
In your case, you and your spouse transferred an amount from your joint AUD account into your spouse's USD account. At a later date, the equivalent Australian dollar amount was transferred back to your and your spouse's joint account. As you had no foreign currency or a right to foreign currency, the foreign exchange gains and losses provisions do not apply to you.
Capital gains tax
You make a capital gain or capital loss when a capital gains tax (CGT) event happens to a CGT asset.
When considering the gains that may arise from a CGT event, it is essential to determine who the owner of the asset is. In your case a CGT event occurred on date B in the 2013-14 income year when funds were withdrawn from your spouse's USD account into your joint AUD account. As you did not own the account from which the withdrawal was made, there are no CGT implications for you.
In summary, you do not need to declare any amount in your 2013-14 income tax return as a result of the withdrawal on date B.
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