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Edited version of your private ruling
Authorisation Number: 1012520012353
Ruling
Subject: Transfer of shares purchased without your knowledge
Question
Will any net capital gain or net capital loss you make in respect of the transfer of shares be included in your assessable income or be carried forward as a capital loss respectively?
Answer
Yes.
This ruling applies for the following periods:
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commences on:
1 July 2012
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 are the legal and beneficial owner of a parcel of shares.
You will dispose of the shares.
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 109-5,
Income Tax Assessment Act 1997 Section 110-25,
Income Tax Assessment Act 1997 Section 110-55,
Income Tax Assessment Act 1997 Section 112-20,
Income Tax Assessment Act 1997 Section 115-5,
Income Tax Assessment Act 1997 Section 115-10,
Income Tax Assessment Act 1997 Section 115-15,
Income Tax Assessment Act 1997 Section 115-20,
Income Tax Assessment Act 1997 Section 115-25,
Income Tax Assessment Act 1997 Section 115-100,
Income Tax Assessment Act 1997 Section 116-20 and
Income Tax Assessment Act 1997 Section 116-30.
Reasons for decision
You make a capital gain or capital loss when a CGT event happens to a CGT asset that you own, such as shares. CGT event A1 happens if you dispose of (sell or transfer) an asset to someone else: Section 104-10 of the Income Tax Assessment Act 1997.
You make a capital gain if your capital proceeds are more than your assets cost base and the net gain is generally included in your assessable income. You make a capital loss if your capital proceeds are less than your assets reduced cost base and the net loss must generally be carried forward until it is able to be applied to reduce another capital gain.
Capital proceeds are the term used to describe the amount of money that you receive, or are entitled to receive, for the disposal of the asset. The receipt of less than the market value of the asset, where the transaction is not at arms length, generally results in you being considered to have received the market value when calculating your net capital gain or loss.
In the absence of evidence to the contrary, such as trust documents, the legal and beneficial owner of shares is the person in whose name the shares are registered in.
In your situation, as there is no evidence to the contrary, you are considered to be the legal and beneficial owner of the shares.
Accordingly, upon the transfer of your shares, we consider you to have disposed of a CGT asset and the net capital gain or loss made is calculated under the capital gains tax provisions.
For further information on calculating your capital gain or capital loss please refer to the publication Guide to capital gains tax 2013, which is available from our website www.ato.gov.au