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Edited version of private advice
Authorisation Number: 1051640961663
Date of advice: 2 March 2020
Ruling
Subject: Replacement asset roll-over
Question 1
Did capital gains tax (CGT) event C1 under section 104-20 of the Income Tax Assessment Act 1997 (ITAA 1997) happen when the units you owned in the investment plan were sold without your consent?
Answer
Yes.
The units in the investment plan that were sold without your consent were 'lost' within the meaning of section 104-20 of the ITAA 1997 which means that CGT event C1 happened on disposal. Although CGT event A1 also happened, CGT event C1 is the most specific to your situation and takes precedence.
Question 2
Are you eligible for a CGT roll-over under section 124-70 of the ITAA 1997 in relation to the units that were disposed of without your consent?
Answer
Yes.
You are able to choose a roll-over as the original assets you owned were lost, as specified in paragraph 124-70(1)(b) of the ITAA 1997, and you met the requirements that relate to receiving replacement assets as compensation for those that were lost, as set out in section 124-80 of the ITAA 1997. Taxation Determination TD 94/77 confirms that there is no restriction on the number or type of assets that can be acquired in replacement of an original asset(s).
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You purchased units in a managed investment plan through your financial planner.
Some years later you instructed your financial planner to sell part of your investment portfolio.
The entire portfolio was sold in error.
You received the proceeds equating to your part sale request.
Your financial planner arranged for the remainder of the sale proceeds to be reinvested in units in the managed investment plan to compensate you for the error.
You made a capital gain on the sale of the units in the investment plan.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-20
Income Tax Assessment Act 1997 section 124-70
Income Tax Assessment Act 1997 paragraph 124-70(1)(b)
Income Tax Assessment Act 1997 section 124-80