| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012462692920
Ruling
Subject: CGT - barter consideration
Question 1
Does the sale of barter assets give rise to CGT Event A1?
Answer
Yes
Question 2
Is a loss on the sale of barter assets a capital loss?
Answer
Yes
This ruling applies for the following periods
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
You own real property which is rented whilst being actively marketed for sale.
Occasionally the properties are sold and some of the consideration is received as a barter.
It is not always possible to use the barter for expenses. When you have excess barter, they are sold to third parties.
The price you obtain for this sale is generally less than the value able to be achieved by bartering.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 108-5
Income Tax Assessment Act 1997 section 104-10
Reasons for decision
Detailed reasoning
The barter is a capital gains tax (CGT) asset because it is property under section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997). The barter is property because it can be assigned, transmitted or turned to account with a third party (paragraph 43 of Taxation Ruling TR 95/35).
In accordance with section 104-10 of the ITAA 1997, when you sell the barter, CGT event A1: Disposal of an asset occurs.
Capital Loss
Section 100-35 of the ITAA 1997 provides that you make a capital loss upon a CGT event happening where the cost base of the relevant CGT asset exceeds the proceeds you receive in respect of that event.
As the barter is a CGT asset, the sale of this asset may result in a capital gain or a capital loss. The capital gain or capital loss is calculated by deducting the cost base from the capital proceeds. In your case, the cost base is the amount that you paid to acquire the barter, or the AUD value of the amount of the barter received as payment on sale of the property. The capital proceeds are the amount that you received upon the sale of your barter.
A capital loss can be carried forward indefinitely until all of the capital loss is offset against any capital gains. A capital loss can only be offset against a capital gain. You need to retain your records in regards to this loss for five years after applying all capital losses.