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Edited version of private advice
Authorisation Number: 1051598009436
Date of advice: 6 November 2019
Ruling
Subject: Income tax - capital gains tax
Question 1
Is the capital gain from the sale of the land assessable in the income year in which the contract was entered into?
Answer
Yes.CGT event A1 occurs when you dispose of a CGT asset. Based on your facts, CGT event A1 happened to the land during the year ended XXXX. The time of the event is when the contract is entered into.
You are required to include a capital gain in the year of income in which the contract is made.
Question 2
Are you required to include the capital gain from the sale of the property in your assessable income for the relevant income year before a change of ownership occurs?
Answer
No. Based on information provided by you, your circumstances align with the requirements in Taxation Determination TD 94/89. This TD provides that where the contract is settled in a later year of income, you are required to include the capital gain in the year of income in which change of ownership occurs. Based on your facts, change of ownership will occur some years into the future. You have told us that you will amend your XXXX return when settlement occurs.
Please note that in your case there is no time limit to amend the XXXX income tax return as per Section 170 (10AA) of the Income Tax Assessment Act 1936.
This ruling applies for the following period:
Year ending 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You purchased a block of land at XXXX in XXXX.
You have signed a contract to sell this land in XXXX and your share of the proceeds will be XXXX.
The proceeds of the sale will be paid over XXXX years, with the last payment to be made in XXXX.
The land title will not transfer until the final settlement payment is made. The purchaser will not have full use of the land until the final settlement payment is made.
You will amend your XXXX tax return once the final settlement payment is made in the financial year ending XXXX.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 104-10