Edited version of private advice

Authorisation Number: 1052046482959

Date of advice: 14 November 2022

Ruling

Subject: CGT - disposal of shares

Question

Can you disregard the capital gain made from the disposal of your shares in company A where you were a foreign resident at the time of disposal of the shares?

Answer

Yes.

Based on the information provided, it is considered that your freezer shares and growth shares in company A did not meet the definition of taxable Australian property as described in section 855-15 of the Income Tax Assessment Act 1997 (ITAA 1997).

At the time of ceasing Australian tax residency in 20XX, you did not turn your mind to Capital Gains Tax (CGT) event I1 about ceasing Australian tax residency as you were unaware of its existence, criteria or implications. Therefore, it is accepted that you did not make a choice to disregard a capital gain or loss that may have arisen from CGT event I1.

Section 102-23 of the ITAA 1997 states that a CGT event still happens even if, (a) it does not result in a capital gain or capital loss, or (b) a capital gain or loss from the event is disregarded.

You can disregard the capital gains made from the subsequent disposal of your freezer shares and growth shares in company A under section 855-10 of the ITAA 1997 because you were a foreign resident at the time of disposal of the shares.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were a full-time employee of company A.

You were offered to participate in various equity programmes of the company.

You were issued shares on different dates during your employment with the company.

You were a minority shareholder holding less than 10% shares in company A.

To the best of your knowledge, company A did not directly (or indirectly) hold any real property situated in Australia, or any mining quarrying or prospecting right, at any time.

On XX XXXX 20XX, you relocated to country X with your spouse and children.

You became a non-resident of Australia for taxation purposes from that date.

You lodged an income tax return for the year you became a non-resident, you only included capital gains from disposal of shares in a listed company.

When completing the tax return, you did not turn your mind to CGT event I1 about ceasing Australian tax residency as you were unaware of its existence, criteria or implications.

You sold all your company A shares while you were a non-resident.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 102-20

Income Tax Assessment Act 1997 section 102-23

Income Tax Assessment Act 1997 section 103-25

Income Tax Assessment Act 1997 section 104-160

Income Tax Assessment Act 1997 section 104-165

Income Tax Assessment Act 1997 section 108-5

Income Tax Assessment Act 1997 section 116-30

Income Tax Assessment Act 1997 section 855-10

Income Tax Assessment Act 1997 section 855-15