Edited version of private advice

Authorisation Number: 1052187836555

Date of advice: 2 November 2023

Ruling

Subject: CGT - property

Question

Was the Property acquired prior to 20 September 1985, for the purposes of item 1 of the table in subsection 109-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period:

1 July 20xx - 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

A contract for sale and purchase of land, for the Property, with Individual A as vendor and Individual B as purchaser was executed prior to 20 September 1985 (the Contract).

The contract for the sale and transfer of the land occurred in a later income year after the 20 September 1985.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-10(5)(a)

Income Tax Assessment Act 1997 Division 109-5

Income Tax Assessment Act 1997 section 109-5

Reasons for decision

All legislative references are to the Income Tax Assessment Act 1997 unless stated otherwise.

Division 109 sets out the circumstances in which you can acquire a CGT asset and the time of acquisition.

The table in subsection 109-5(2) sets out specific rules for the circumstances in which, and the time at which, you acquire a CGT asset as a result of a CGT event happening.

Under Event Number A1 of table in subsection 109-5(2) a taxpayer acquires an asset from an entity when they enter into the disposal contract with the entity or, if none, when the entity stops being the asset's owner.

In your case, you entered into the Contract with Individual A on xx prior to 20 September 1985.

TD 94/89: Taxation Determination: Income Tax: capital gains: in what year of income is a taxpayer required for tax purposes to include a capital gain or loss in relation to land disposed of under a contract which is made in one year of income, but which is settled in a later year of income? provides the Commissioner's view as to the year of income you are required to include a capital gain or loss in relation to land disposed of under a contract which is made in one year of income, but which is settled in a later year of income.

TD 94/89 refers to repealed subsection 160U(3) of the Income Tax Assessment Act 1936 (ITAA 1936). It was replaced by paragraph 104-10(3)(a) of the ITAA 1997 which has the same meaning as the repealed section. Therefore, the Commissioner's views expressed in TD 94/89 apply equally to the equivalent provisions of the ITAA 1997.

TD 94/89 at paragraph 2 states:

2. Where land is disposed of under a contract, subsection 160U(3) of the Income Tax Assessment Act 1936 deems the disposal to have taken place when the contract is made ...

As the settlement of the Property, which occurred on 19xx, was the result of the Contract made on xx (prior to 20 September 1985) you are taken to have acquired the Property on that date.