ATO ID 2002/809: Capital gains tax: Unincorporated association - disposal of asset
Date of decision: 27 May 2002
Year of income: Year ending 30 June 2002
Business line: Private Groups and High Wealth Individuals

Issue
Does an unincorporated association (or do the individual members) make the capital gain (or capital loss) as a result of CGT event A1 occurring under section 104-10 of the Income Tax Assessment Act 1997 ('ITAA 1997') upon disposal of a CGT asset held by the unincorporated association?

Decision
The unincorporated association (and not the individual members) makes the capital gain (or capital loss) as a result of CGT event A1 in section 104-10 of the ITAA 1997 arising from the disposal of a CGT asset held by the unincorporated association.

Facts
An unincorporated club disposes of a CGT asset. The club is not an exempt entity under Division 50 of the ITAA 1997.

Reasons for decision
Summary: An unincorporated association is an entity and a company for income tax purposes (sections 960-100, 995-1 of the ITAA 1997). The members, in their relationship under the association's constitution, constitute the unincorporated association. The assets held in that relationship represent the assets held by the unincorporated association. Therefore, for the purposes of CGT event A1 under section 104-10 of the ITAA 1997, the unincorporated association is an entity that owns the CGT asset and on its disposal is the entity that makes any resulting capital gain or capital loss. Although the individual members of the unincorporated association jointly own the association's assets at general law, it is the ownership of those assets by the unincorporated entity as a company under tax law that is relevant for the purposes of CGT event A1. Therefore capital gains (or capital losses) are not made by the individual members from the disposal of an asset held by the unincorporated association. The capital gains (or capital losses) are made by the unincorporated association itself.

Legislative references: Income Tax Assessment Act 1997 section 104-10 section 960-100 section 995-1
Related ATO interpretative decisions: ATO ID 2002/808
Subject references: Association income Capital gains Capital gains tax CGT event A1 - disposal of CGT asset Companies Non profit companies