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Ruling
Subject: Capital gains and losses
Question and answer
Can you transfer shares to your father without incurring a capital loss?
No
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You purchased shares which has lost about 90% of their value of the last 2 years.
You have not sold these shares yet.
The shares were acquired after 20 September 1985.
You intend to transfer the share to your father.
You will make a capital loss on your shares
Relevant legislative provisions
Income Tax Assessment Act 1997
Section 104-10
Reasons for decision
A taxpayer will make a capital gain or loss if a CGT event happens. Where a CGT event involves a contract, the time of the event is usually when the contract is executed.
CGT event A1
Section 104-10 of the Income Tax Assessment Act 1997 defines CGT event A1 as the disposal of an asset.
CGT event A1 occurs when disposal contract is entered into or, if there is none, it is when you stop being asset's owner. In the case of transferring shares, you CGT event A1 will occur when you no long are the owner of those shares, be it through the sale or transfer of your shares to another individual or entity.
There are a number of CGT exemptions and rollovers available to taxpayers however, none apply to transferring shares between individuals.