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Edited version of your private ruling
Authorisation Number: 1012107710774
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Subject : Capital Gains Tax collectibles
Questions and answers:
1. Are the sale of your collectible items lot X subject to capital gains tax?
No.
2. Is the sale of the remaining collectible items subject to capital gains tax?
No.
This advice applies for the following period:
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commenced on:
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You understand that as the deceased commenced their collectible items pursuit as a personal interest and never considered this as a business and that most of the records pertaining to the date of purchase are not available.
Therefore, to assist you enclose the Executor's detailed summary of the collectible items sold showing that all lot estimate values were either $400 or less.
Only a few lots realised a value of greater than $400.
Most purchases of the collectible items were made before 1985.
You acknowledge that the collectible items were acquired in sets prior to 1995.
The X lot is the only set of collectible items that exceeded $500 and was purchased in prior to 1985.
Relevant legislative provisions
Income Tax Assessment Act 1997
Section 102-20
Section 108-10
Section 108-17
Reasons for decision
The CGT provisions are contained in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997). CGT is the tax you pay on certain capital gains you make. You make a capital gain or a capital loss when a 'CGT event' happens (section 102-20 of the ITAA 1997). The most common CGT event A1 happens when you dispose of the asset to another party (section 104-10 of the ITAA 1997).
Section 108-5 of the ITAA 1997 states that a CGT asset is any kind of property, or a legal or equitable right that is not property.
CGT assets fall into one of three categories:
· collectables
· personal use assets, or
· Other assets.
A collectable is defined in subsection 108-10(2) of the ITAA 1997 as being:
(a) Artwork, jewellery, an antique, or a coin or medallion; or
(b) A rare folio, manuscript or book; or
(c) A postage stamp or first day cover;
That is used or kept mainly for your (or your associates) personal use or enjoyment
A capital gain or loss from a collectable is calculated in the same way as a capital gain or loss any other CGT asset. However, the third element of the cost base, that is, the non-capital costs of ownership, are not included (section 108-17 of the ITAA 1997).
The collectible items are collectables for capital gains purposes.
The majority of the items were acquired before 1985, which means that they will be exempt from capital gains tax when sold. However, the sale of a collectable that was purchased after 20 September 1985 may attract a capital gain. If the item was purchased for less than $500, the gain or loss is disregarded, unless it is part of a set and the set itself costs more than $500.
The only set of collectible items that cost more than $500 is the X lot 4 but was purchased pre CGT and therefore not subject to capital gains tax.