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Edited version of your written advice
Authorisation Number: 1013093659301
Date of advice: 22 September 2016
Ruling
Subject: Assessable income
Question
Are the proceeds from the sale of computer software included in your assessable income?
Answer
No.
This ruling applies for the following period
Year ending 30 June 20YY
The scheme commences on
1 July 20XX
Relevant facts and circumstances
You have a computer collection
The collection commenced 19XX from items you already had
You sold a computer tape that had operating system software on it to a museum in Country X.
You did not purchase the software. You copied the software from your universities computer to your computer tape in 19YY.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 6-5(2)
Income Tax Assessment Act 1997 subsection 104-10(5)
Reasons for decision
Under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997), the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year.
Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.
Income from property occurs when you dispose of property, which includes assets you hold. When certain assets are sold, the capital gains tax (CGT) provisions may apply. However, not all assets are subject to CGT. Assets acquired before 20 September 1985 are exempt under subsection 104-10(5) of the ITAA 1997.
Application to your circumstances
As the computer tape and software on it was created in 19YY, and you have held ownership of it since its creation, it is an asset that was acquired before 20 September 1985. Therefore the proceeds you received for the sale of the asset are exempt from CGT and are not assessable income.
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