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Ruling

Subject: Capital gains tax - personal use asset

Question 1

Will your precious metal collection be treated as a personal use asset for capital gains tax purposes?

Answer

Yes.

Question 2

Will any capital gain be disregarded on the sale of your precious metal and minerals acquired for less than $10,000?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2012.

Year ended 30 June 2013.

The scheme commenced on

1 July 2011.

Relevant facts

You have had a lifetime interest in precious metal and other minerals.

You have been accumulating your collection of precious metal over several decades.

Approximately half of your collection was found from hobby activities, fossicking and collecting. The other half of your collection was purchased or traded.

No individual item was purchased for more than $10,000.

Most of your collection was acquired before 1985.

Your precious metal collection has a current market value of several hundred thousand dollars.

Your collection consists of several thousand items.

The collection has been acquired purely as a hobby, with no intention of making a profit.

You intend to sell your collection.

Relevant legislative provisions

Income Tax Assessment Act 1997 - Section 108-5

Income Tax Assessment Act 1997 - Section 108-20

Income Tax Assessment Act 1997 - Subsection 118-10(3)

Reasons for decision

Question 1

A personal use asset is defined as:

· a capital gains tax (CGT) asset, other than a collectable, that is used or kept mainly for the personal use or enjoyment of you or your associate(s)

· an option or a right to acquire a right to acquire a CGT asset

· a debt resulting from a CGT event involving a CGT asset kept mainly for your personal use and enjoyment, or

· a debt resulting from doing something other than gaining or producing your assessable income or carrying on a business.

ATO ID 2003/451 states that gold nuggets are 'personal use assets' under subsection 108-20(2) of the ITAA 1997 if a taxpayer has collected them pursuing a hobby and not in the course of carrying on any business or profit making activity.

In this case you have been collecting precious metal and minerals over several decades. You have acquired your collection through hobby activities, fossicking, collecting, trading and purchasing. You have acquired this collection as a hobby, with no intention of profit. As you have acquired your precious metal collection purely as a hobby and with no intention of making a profit, your precious metal and minerals will be considered a personal use asset for capital gains tax purposes.

Question 2

When a CGT event happens to a personal use asset, any capital gain you make from the asset is disregarded if you acquired the asset for $10,000 or less.

In this case, your precious metal collection consists of several thousand items. No individual item was purchased for greater than $10,000. As each item was purchased for less than $10,000, any capital gain you make on the sale of your precious metal or minerals will be disregarded.