Edited version of your private ruling

Authorisation Number: 1012600757928

Ruling

Subject: CGT - collectables and private use assets - disposal

Question 1:

Are your collectables considered to be personal use assets?

Answer:

Yes.

Question 2:

Will you be subject to capital gains tax (CGT) on the disposal of your personal use assets?

Answer:

No.

Question 3:

Does the absence of receipts demonstrating the value of these personal use assets result in a presumption that they were bought collectively?

Answer:

No.

Question 4:

Does the absence of receipts demonstrating that the personal use assets were bought separately result in a presumption that they were bought for over $10,000 or $500

Answer:

No.

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commenced on:

1 July 2013

Relevant facts:

You have purchased numerous collectables from 200X onwards.

You have left some of the collectables in their original wrapping.

You have had some autographed and display these in your apartment and show some to your friends.

You have purchased the collectables for your own personal use and enjoyment.

You have not purchased any of the collectables for more than $500.00 Australian dollars.

You are considering selling your collection online in one transaction to save selling costs.

You are not in the business of selling collectables.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Subsection 108-20(1)

Income Tax Assessment Act 1997 Subsection 118-10(3)

Reasons for decision:

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.

Under section 6-10 of the ITAA 1997, assessable income also includes statutory income. Statutory income is amounts that are not ordinary income but are included as assessable income by provisions of the tax law.

Capital Gains Tax (CGT): personal use assets

Section 102-5 of the ITAA 1997 provides that your assessable income includes net capital gain for the income year.

However, a capital gain from a personal use asset is exempt from CGT if the asset was acquired for $10,000 or less (Section 118-10(3) of the ITAA 1997).

You cannot make a capital loss from a personal use asset (Section 108-20(1) of the ITAA 1997).

A personal use asset is a CGT asset, other than a collectable, that is kept or used mainly for your personal use and enjoyment.

If personal use assets make up a set that would ordinarily be disposed of as a set, then the set makes up a single personal use asset. The exemption of $10,000 will apply to the set.

Application to your circumstances

The income you receive in relation to your activity is not assessable under section 6-5 of the ITAA 1997 as ordinary income. You are merely realising your capital assets.

You are not carrying on a business in relation to sale of the collectables.

The collectables are personal use asset's and were acquired for less than $10,000. Accordingly, any capital gain on a personal use asset is exempt from CGT. You cannot make a capital loss on a personal use asset.

Therefore the proceeds of the sale are not included in your assessable income.