| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1051520340115
Date of advice: 18 June 2019
Ruling
Subject: Capital gains tax
Question
Is any capital gain or capital loss you make from the sale of the two properties disregarded?
Answer
Yes, as the change in share ownership does not change the status of the acquisition date, a capital gain or capital loss is disregarded from the disposal of the two properties as the assets remain pre-CGT assets.
This ruling applies for the following period:
Year ended 30 June 2020
The scheme commences on:
20 September 1985
Relevant facts and circumstances
The Company is incorporated
The shares in the Company have are owned for the benefit of the ABC group. The ABC group consists of the following:
· Taxpayer 1 (now deceased);
· Taxpayer 2 - partner of taxpayer 1;
· Taxpayer 3 - child of taxpayer 1 and taxpayer 2;
· Taxpayer 4 - child of taxpayer 1 and taxpayer 2;
· Taxpayer 5 - child of taxpayer 1 and taxpayer 2; and
· Taxpayer 6 - child of taxpayer 1 and taxpayer 2.
The Company has issued various classes of shares
Upon incorporation the following shares were issued:
|
|
A |
REDB |
C |
D |
E |
F |
|
Taxpayer 1 |
1 |
|
|
|
|
|
|
Taxpayer 2 |
|
1 |
|
|
|
|
|
Taxpayer 3 |
|
|
10 |
|
|
|
|
Taxpayer 4 |
|
|
|
10 |
|
|
|
Taxpayer 5 |
|
|
|
|
10 |
|
|
Taxpayer 6 |
|
|
|
|
|
10 |
The Company acquired a property before 1985 (Property 1)
The Company acquired a property before 1985 (Property 2)
There have been no capital improvements on either Property since September 1985
There have been no buildings or structure construction on either Property since September 1985
Property 1 and Property 2 are pre-CGT assets
The ownership of the shares remained the same until the death of taxpayer 1 when the A Class shares were transferred to taxpayer 2 in accordance with a will. The ownership of the shares as that date changed to the following:
|
|
A |
REDB |
C |
D |
E |
F |
|
Taxpayer 2 |
1 |
1 |
|
|
|
|
|
Taxpayer 3 |
|
|
10 |
|
|
|
|
Taxpayer 4 |
|
|
|
10 |
|
|
|
Taxpayer 5 |
|
|
|
|
10 |
|
|
Taxpayer 6 |
|
|
|
|
|
10 |
The family decided to rationalise the ownership of the shares. Taxpayer 2, taxpayer 3 and taxpayer 4 transferred ownership of their shares to Taxpayer 5 and taxpayer 6. The share ownership was then as follows:
|
|
A |
REDB |
C |
D |
E |
F |
|
Taxpayer 5 |
1 |
|
10 |
|
10 |
|
|
Taxpayer 6 |
|
1 |
|
10 |
|
10 |
Property 1 current market value is $XXX
Property 2 current market value is $XXX
The properties will be sold in the 2020 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 160ZZS
Income Tax Assessment Act 1997 section 104-10(5)(a)
Income Tax Assessment Act 1997 section 149-15