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Edited version of your private ruling
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Subject: capital gain made on a transfer of shares
Question:
Is the capital gain made on a transfer of shares disregarded?
Answer:
No.
This ruling applies for the following period
Income year ending 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You held various shares in Australian listed companies.
Your spouse manages all of your financial affairs.
You decided to sell your shares and your spouse set up a share trading account to facilitate this.
Your spouse transferred the shares to their name and sold some of the shares.
You made a capital gain on the transfer of the shares.
Detailed reasoning
In order for Capital Gains Tax (CGT) to apply to a CGT asset, a CGT event must happen.
Subsection 100-25(2) of the Income Tax Assessment Act 1997 (ITAA 1997) specifies that a CGT asset does include shares.
Section 104-10 of the ITAA 1997 specifies that CGT event A1 happens if you dispose of a CGT asset and the time of the event is when you enter into the contract for the disposal or, if there is no contract, when the change of ownership occurs.
Since you purchased the shares post 19 September 1985 and these were sold after this time, it means that CGT event A1 applies to your situation.
Subsection 104-10(4) of the ITAA 1997 specifies that a capital gain will arise if the capital proceeds from the disposal are more than the asset's cost base. A capital loss will arise if the capital proceeds are less than the asset's reduced cost base.
You are asking the Commissioner to exercise his discretion so that the relevant capital gains on the transfer of these shares will not be assessable in your 2011 income tax return because of your particular circumstances.
However, Division 118 of the ITAA 1997 outlines the situations where CGT assets are exempt from CGT if certain conditions are satisfied. Since none of these exemptions apply to your situation, you will be subject to CGT on the sale of the above shares.
Subsection 102-5(1) of the ITAA 1997 specifies that any net capital gain will need to be included in your assessable income in the year in which the CGT event occurs. Thus, any net capital gain made on the transfer of the above shares will need to be included in your assessable income in the 2011 year.
Conclusion
While we acknowledge and appreciate your particular circumstances the Commissioner has no discretion to disregard the capital gain that you make as a result of the transfer of your shares
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 100-25(2).
Income Tax Assessment Act 1997 Section 102-5.
Income Tax Assessment Act 1997 Section 104-10.
Income Tax Assessment Act 1997 Subsection 104-10(4).
Income Tax Assessment Act 1997 Section 110-25.
Income Tax Assessment Act 1997 Section 118-1.