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Edited version of private advice
Authorisation Number: 1051590380669
Date of advice: 9 October 2019
Ruling
Subject: Capital Gains Tax
Question
Has capital gains tax event A1 happened on the disposal of your rights as per the Income Tax Assessment Act 1997?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You purchased an asset as part of an investment project.
You sold the asset to another entity.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 108-5
Reasons for decision
Under section 120-20 of the Income Tax Assessment Act 1997, an entity will make a capital gain or a capital loss if a capital gains tax (CGT) event happens to a CGT asset. The term 'CGT asset' is defined in subsection 108-5(1) as:
(a) any kind of property; or
(b) a legal or equitable right that is not property.
CGT event A1 occurs when you dispose of a CGT asset. You are considered to have disposed of a CGT asset if a change of ownership occurs from you to another entity because of some act or event or by operation of law. Generally, the time of the event is when the contract for the disposal is entered into. If there is no contract, the event occurs when the change of ownership takes place (section 104-10).
In this case, the rights are a separate CGT asset and any disposal of the rights to another entity would cause CGT event A1 to happen.
As you have transferred the rights, title and interest in the rights, this has resulted in a disposal of the asset and CGT event A1 has occurred.