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Edited version of private advice
Authorisation Number: 1052238038561
Date of advice: 8 April 2024
Ruling
Subject: CGT - active assets
Question
Were the shares you held in Company A active assets, satisfying subsection 152-40(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Subsection 152-40(3) of the ITAA 1997 provides that a share in a company that is an Australian resident can be an active asset where:
• the market values of the active assets of the company; and
• the market value of any financial instruments of the company that are inherently connected with a business that the company carries on; and
• any cash of the company that is inherently connected with such a business;
• is 80% or more of the market value of all the assets of the company.
In this case, more than 80% of the assets of the company at the time of the financial statements are active assets. Therefore, your shares in Company A are considered active assets at that time.
This ruling applies for the following period:
Year ended 30 June 20YY
The scheme commenced on:
1 July 20YY
Relevant facts and circumstances
You purchased shares in a company.
You received dividends which were based on the performance of a related company of which you were employed.
You have now sold the shares.
The financial reports of the company showed that over 80% of their assets were active assets.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 152-40(3)