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Edited version of private advice
Authorisation Number: 1051843174215
Date of advice: 26 May 2021
Ruling
Subject: Capital gains tax
Question
Did a CGT event occur when you 'accidently sold' most of your portfolio and then immediately re-purchased it?
Answer
Yes
This ruling applies for the following period:
Income year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You had a portfolio of investments with an institution valued at $X.
At this time the intention was to sell one of the investments valued at $X.
You used a Form to dispose of your investment. You accidently sold all of your investments.
The institution's products reference guide states that completed forms are processed 3pm each business day. The institution accepted the sale.
On realising your error, you reinvested in the same investments other than the one you intended to sell as soon as you realised the error (but after the sale had been processed). There was a slight change in the value of the investments due to the small amount of time between the sale and purchase
Relevant legislative provisions
Income Tax Assessment Act Section 104-10
Reasons for decision
Summary
In completing the Form, you authorised the sale of the parcel of investments as indicated on the Form. For the purposes of capital gains tax this means a CGT Event A1 occured.
Detailed reasoning
Under subsection 104-10(3) of the Income Tax Assessment Act 1997, the time of the event is when the taxpayer entered into the contract for the disposal or if there was no contract, the time when the change of ownership occurred. The only time this Event does not occur is where the contract falls through before completion.
The CGT provisions do not give the Commissioner of Taxation any discretion to cover for any errors of the type you have described.
From the facts presented, you completed the transaction for the sale of your investment and then used the funds from the sale to re-purchase most of the parcels you had sold. There was a slight change in the value of the investments acquired due to the small amount of time between the sale and purchase.
Given the facts presented, a CGT Event A1 has occurred and you need to declare the net capital gain as a result of the disposal.
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