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Edited version of your written advice
Authorisation Number: 1012997435553
Date of advice: 13 April 2016
Ruling
Subject: What the acquisition date for purchasing the CGT asset was
Question
For CGT purposes did the entity acquire the asset on the date the sale contract was signed?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commenced on
1 July 2014
Relevant facts and circumstances
The entity purchased an asset.
The asset included smaller assets. All assets were allocated amounts on the sale contract.
The entity purchased one particular asset which was itemised and included in the total price.
The sale contract date, the sale settlement date, the date the asset was registered with one authority and the date the asset was registered with another authority were dates which fell sequentially.
The entity is intending to sell the asset in the near future.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 108-5(1)
Income Tax Assessment Act 1997 Subsection 109-5(1)
Income Tax Assessment Act 1997 Subsection 109-5(2)
Reasons for decision
Capital Gains Tax (CGT) affects your income tax liability because your assessable income includes your net capital gain for the income year. Your net capital gain is the total of your capital gains for the income year, reduced by certain capital losses you have made.
Subsection 108-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states a CGT asset is any kind of property or a legal or equitable right that is not property.
Subsection 109-5(1) of the ITAA 1997 states in general you acquire a CGT asset when you become its owner. In this case, the time when you acquire the asset is when you become its owner.
Subsection 109-5(2) of the ITAA 1997 contains a table which sets out specific rules for the circumstances in which, and the time at which, you acquire a CGT asset as a result of a CGT event happening. Specifically, CGT event A1 happens when an entity disposes of a CGT asset to you (except where you compulsorily acquire it). You acquire the asset when the disposal contract is entered into or, if none when the entity stops being the asset's owner.
In this case, the asset the entity purchased as part of the total asset purchase is considered a CGT asset. It was acquired when the sale contract was entered into.