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Edited version of private advice
Authorisation Number: 1052233841842
Date of advice: 28 March 2024
Ruling
Subject: Capital gains tax
Question
Is the acquisition date of the property the relevant date?
Answer
Yes.
Based on the information provided to the Commissioner the acquisition date of the property is the relevant date.
Pursuant to subsections 104-10(1) and 104-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997), CGT event A1 happens if a taxpayer disposes of a CGT asset; the disposal of a CGT asset takes place if a change of ownership occurs from the taxpayer to another entity, whether because of some act or event or by operation of law.
The time of CGT event A1 is:
• when you enter into the contract for the disposal: paragraph 104-10(3)(a), or
• if there is no contract - when the change of ownership occurs: paragraph 104-10(3)(b).
There was no contract in relation to the property, but the court order is the operation of law which replaces the contract.
The date of the court order is the acquisition date in your case.
This ruling applies for the following period:
Year ending 30 June 20xx
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Family court consent orders were entered into by you and your parents.
The orders stipulated that you and your parents were to sell the first property and that you were to purchase your parents share of a second property.
You and your parents agreed to sell the first property.
You had a share in the first property with your parents.
After payment of all outstanding land taxes the net proceeds were distributed equally between all parties.
The first property was sold and settlement was affected later in the same year.
Your parents agreed to sell their respective interests in the second property to you (a family court valuation was obtained stating the total value of the property) and you agreed to purchase your parents' interests.
You were required to pay for the half interest in the second property to your parents within a couple of months of settlement of the first property.
No other contract or agreement was entered into effecting the sale of the half interest of the second property to you.
You paid the agreed amount to your parents near the end of the year.
Part of the proceeds of the first property was held in trust until you paid the agreed amount for the second property.
Relevant legislative provision
Income Tax Assessment Act 1997 section 104-10