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Subject: Capital gains tax
Question and answer
Was CGT event A1 triggered when you transferred a percentage of your ownership to your family member in each of a number of rental properties?
Yes.
This ruling applies for the following period
Year ending 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You transferred a percentage of your ownership in a number of rental properties to a family member.
You were required to do this as part of a loan agreement.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 110-25
Income Tax Assessment Act 1997 section 116-30
Reasons for decision
Capital gains tax
Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer makes a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985.
A taxpayer makes a capital gain if their capital proceeds from the sale of a CGT asset are greater than the cost base for the purchase of that asset, for example, if a taxpayer received more for an asset than they paid for it.
A taxpayer makes a capital loss if their reduced cost base for the purchase of that asset is greater than the capital proceeds resulting from the sale of that asset.
Capital gains tax is not a separate tax, it forms part of a taxpayer's assessable income and is taxed at each taxpayer's marginal tax rate.
The transfer of a share in a property results in a CGT event occurring. This is CGT event A1.
You have transferred a percentage of your ownership in each of your properties to a family member, this transfer has triggered CGT event A1.