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Edited version of your written advice
Authorisation Number: 1012934396860
Date of advice: 8 January 2016
Ruling
Subject: Cost base of shares
Question and answer:
Will the first element of the cost base of the shares be the acquisition price as per schedules 1 to 4?
Yes.
This ruling applies for the following periods:
Year ending 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
You have provided us with schedules 1 to 4 which comprise a list of XX companies in which the deceased held shares.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20
Income Tax Assessment Act 1997 Section 110-25
Reasons for decision
A capital gain or capital loss is made as a result of a capital gains tax (CGT) event happening to a CGT asset (section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997)). The most common CGT event is CGT event A1 the disposal of a CGT asset.
The cost base of a CGT asset is generally the cost of the asset when a taxpayer bought it. However, it also includes certain other costs associated with acquiring, holding and disposing of the asset.
In order to work out how much a taxpayer's capital gain or capital loss is, a taxpayer must first establish the cost base or reduced cost base of a taxpayer's ownership interest in the property.
Section 110-25 of the ITAA 1997 states that the cost base of a CGT asset is made up of five elements:
1. Money you paid for the asset.
2. Incidental costs of acquiring the property,
3. Costs of owning the asset
4. Capital costs to increase or preserve the value of your asset or install or move it
5. Capital costs of preserving or defending your ownership of or rights to the asset.
The Commissioner accepts the acquisition prices listed in schedules 1 to 4 listing the XX companies held by the deceased as the first element of the cost base.