| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1012643280084
Ruling
Subject: Capital gains tax
Question
Are you entitled to disregard the capital gain or capital loss on the sale of your pre-CGT asset?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2014
The scheme commences on
1 July 2013
Relevant facts and circumstances
You acquired an asset prior to 20 September 1985.
Additions were made to the asset prior to 20 September 1985.
No further additions were made to the asset post 20 September 1985.
The asset was used to produce assessable income.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 108-5.
Income Tax Assessment Act 1997 - Subsection 104-10(4).
Income Tax Assessment Act 1997 - Paragraph 104-10(5)(a).
Reasons for decision
Section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) states that a capital gains tax (CGT) event A1 happens if a taxpayer disposes of a CGT asset. Section 108-5 of the ITAA 1997 provides that a CGT asset is any kind of property, or a legal or equitable right that is not property. A capital gain or a capital loss may arise if a CGT event happens to a CGT asset.
The asset held is a CGT asset. The sale of the asset will give rise to CGT event A1 and any realised gain on the transaction will be a capital gain under subsection 104-10(4) of the ITAA 1997.
Subparagraph 104-10(5)(a)(i) of the ITAA 1997 provides that a capital gain or capital loss from the CGT event A1 is disregarded if the asset was acquired before 20 September 1985.
In your case you acquired the asset prior to 20 September 1985 and there were no improvements made to the asset post 20 September 1985. Therefore, you can disregard any capital gain made from the disposal of the pre-CGT asset.