Edited version of private ruling

Authorisation Number: 1011657348894

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Ruling

1. Does the Commissioner of Taxation have the discretion to allocate a medical expenses rebate amount to financial year preceding the expense incurred?

No.

2. Does the Commission of Taxation have the discretion to defer the reporting of a capital gain to a subsequent financial year in view of your personal circumstances?

No.

This ruling applies for the following period

Year ended 30 June 2011

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You sold shares in the financial year ended 30 June 2010.

You paid surgical expenses in the financial year ended 30 June 2011.

You were retrenched from your job in the financial year ended 30 June 2011.

Reasons for decision

Capital gains deferral

Section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) specifies that a capital gains tax (CGT) event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. Further, the capital gain or capital loss is made at the time of the event. A capital gain is made if the amount received (called capital proceeds) from the disposal exceeds the cost base of the CGT asset. A capital loss is made if the capital proceeds are less than the reduced cost base.

The shares that you owned are CGT assets and a CGT event A1 happens in the income year when you fund stops being their owner.

There are a number of provisions within the ITAA 1997 that may exempt, exclude or defer a liability for CGT in certain circumstances. These include: 

This Division 118 deals with general exemptions such as cars (section 118-5 of the ITAA 1997) and assets used to produce exempt income (per section 118-12 of the ITAA 1997). However, there is no provision in this Division that allows any capital gains or capital losses on the sale of shares in the current circumstances to be disregarded.

Subdivision 124-B of the ITAA 1997 provides replacement-asset roll-over relief where a CGT asset is compulsorily acquired by an Australian government agency or the asset is lost or destroyed (subsection 124-70(1) of the ITAA 1997). In this case, the shares were neither compulsorily acquired by an Australian government agency nor lost or destroyed.

As there are no specific provisions in the capital gains legislation to allow relief for hardship circumstances, any capital gain made in the income year ended 30 June 2010 cannot be deferred.

You make the capital gain or capital loss in the income year in which you enter into the contract to sell them.

This happens on the day that you accept the offer to purchase your shares - that is, the day you post your acceptance.

Medical expenses rebate

An amount paid by you in the year of income for a medical expenses, less any amount paid in respect of your medical expenses by a government authority or private fund is treated as a rebatable amount in respect of that year of income. Section 159P(1) of the ITAA 1936 has defined the rebatable amount as being available in lieu of the financial year which the expense had been paid. There is no discretion available to the Commissioner so to alter the financial year to which your rebate is refundable.