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Edited version of your private ruling
Authorisation Number: 1012549070880
Ruling
Subject: Capital gains tax - capital loss
Question
Did you make a capital loss on the sale of your precious metals?
Answer:
Yes.
This ruling applies for the following period:
Year ended 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts:
You purchased after 20 September 1985 an amount of a precious metal. The purchase price of the precious metal was an amount per kilo.
You purchased a further amount of precious metal worth an amount. The purchase price was an increased amount per kilo.
You had purchased the precious metal with the intention that the value of the precious metal would increase.
The price of the precious metal did not increase and you sold some of the precious metal in the relevant income year to pay for your general costs of living.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 102-5
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 108-5
Reasons for decision:
Capital gains tax (CGT) is the tax you pay on certain gains you make. You make a capital gain or capital loss as a result of a CGT event happening.
The most common event (CGT event A1) happens if you dispose of a CGT asset to someone else. In your situation, this will be the sale of the precious metal.
A capital gain is income that is derived from the disposal of property. Your assessable income includes your net capital gain for an income year. Your net capital gain is the total of your capital gains for the year, reduced by your capital losses.
You make a capital gain or loss only if a capital gains tax (CGT) event happens. The most common CGT event is when you dispose of a CGT asset to someone else.
In your case:
· precious metal is a kind of property, and is therefore a CGT asset.
· disposing of your precious metal to someone else will be CGT event.
· you will need to include in your return any capital loss in the relevant income year that you sold your precious metal.
Keeping records
You must keep records of every act, transaction, event or circumstance that may be relevant to working out whether you have made a capital gain or capital loss from a CGT event. Penalties can apply if you do not keep the records for at least five years after the relevant CGT event.
You should also keep records relating to a net capital loss you carry forward, which you may be able to apply against a capital gain in a later year. There is no time limit on how long you can carry forward a net capital loss. If you use information from these records in a later tax return, you may have to keep records for longer.
If you have applied a net capital loss, you should generally keep your records of the CGT event that resulted in the loss until the end of any period of review for the income year in which the net capital loss is fully applied.
This means that the five years starts from the date that you use the capital loss.