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Edited version of private advice
Authorisation Number: 1051840735290
Date of advice: 19 May 2021
Ruling
Subject: Capital gains tax
Question 1
Did the disposal of all your shares in your Managed Investment Account with management agency A, trigger CGT event C1 under section 104-20 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
As you did not authorise management agency A to dispose of your shares, they are taken to have been lost under section 104-20 of the ITAA 1997.
Question 2
Are you eligible to choose replacement asset roll-over relief pursuant to Subdivision 124-B of the ITAA 1997 on the basis the shares were 'lost', and you received replacement shares as compensation for the loss of the shares?
Answer
Yes.
You meet the criteria under paragraphs 124-70(1)(b) and 124-70(2)(a) of the ITAA 1997. Your shares were lost, and you were compensated for this by receiving replacement shares for those which were lost. If you choose to obtain a roll-over, any capital gain you made from the lost shares is disregarded and the first element of the cost base of the replacement shares is the cost base of the lost shares at the time they were lost.
This ruling applies for the following period periods:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You had a Managed Investment Account with management agency A.
You requested management agency A transfer the management of your share portfolio to another management agency.
On XX/XX/20XX management agency A incorrectly sold all the shares in your portfolio instead of transferring the management of the shares to management agency B.
On XX/XX/20XX management agency A realised the error and purchased shares to replace the ones they sold.
On XX/XX/20XX the management of your share portfolio was transferred to management agency B.
Relevant legislative provisions
Income Tax Assessment 1997 section 104-20
Income Tax Assessment 1997 Subdivision 124-B
Income Tax Assessment 1997 paragraph 124-70(1)(b)
Income Tax Assessment 1997 paragraph 124-70(2)(a)
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