| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011670077036
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Capital gains tax (CGT) - disposal of property - sympathetic review
Is any capital gain or capital loss made on the disposal of your share of the property disregarded?
No.
This ruling applies for the following period
Year ended 30 June 2010.
The scheme commenced on
Sometime after 20 September 1985.
Relevant facts and circumstances
Your parent lived in a house (the property) that was purchased sometime after 20 September 1985 by you and your two siblings.
The property was purchased with the proceeds from the sale of your parent's previous house which was registered in their name only.
The property was purchased jointly in your name and your two sibling's names because of your parent's concerns; they were entering the early stages of dementia, had other health issues and were not expected to live much longer. Additionally the property was located nearby to where one of your parent's children lived.
Your parent lived in the property as their main residence from the time it was purchased sometime after 20 September 1985 until they passed away.
You considered the property to be your parent's main residence.
Your parent had no other significant assets.
You and your two siblings have not claimed any income or tax deductions in regard to the property because you considered it to be your parents.
You acknowledge that the disposal of the property is subject to CGT, however you believe that this has been an inadvertent and inequitable result because of previous legal advice.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 115-5
Income Tax Assessment Act 1997 Section 115-10
Income Tax Assessment Act 1997 Section 115-15
Income Tax Assessment Act 1997 Section 115-20
Income Tax Assessment Act 1997 Section 115-25.
Reasons for decision
Disposal of property
CGT event A1 happened when you sold the property. The time of the event is when you entered into the contract for sale.
As your parent was not the legal or beneficial owner of the property there are no CGT exemptions applicable upon their death.
You are the legal owner of the property and your acquisition date is when you purchased it sometime after 20 September 1985. As the legal owner you will make the capital gain or capital loss on the sale of your share of the property.
In your circumstances, there are no legislative provisions which would allow you to disregard any capital gain or capital loss made on the sale of the property. Whilst we understand your situation the Commissioner has no discretion to allow taxpayers to disregard any capital gain or capital loss on sympathetic grounds.
Note: Discount capital gain
As the property has been owned for more than 12 months you can choose to use the discount method to calculate your net capital gain. The discount percentage of 50% is applied to the taxable portion of capital gain after you have offset any capital losses in the income tax year and any unapplied net capital losses from earlier years. Generally this method enables your to reduce your capital gain by half.