Private ruling: sale of one tree
Published: January 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are the proceeds of the sale of one tree included in your assessable income? | A1: No

Relevant facts and circumstances: You planted a tree on your private property over 20 years ago. A horticulturalist wants to purchase the tree. They made an offer between $8,500 and $10,000 You are not in the business of selling trees or any other related enterprise. The tree is not located on land used to earn assessable income.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Subsection 118-10(3). | Income Tax Assessment Act 1997 Subsection 108-20(1).

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Under section 6-10 of the ITAA 1997, assessable income also includes statutory income. Statutory income is amounts that are not ordinary income but are included as assessable income by provisions of the tax law. Capital Gains Tax (CGT): personal use assets Section 102-5 of the ITAA 1997 provides that your assessable income includes net capital gain for the income year. However, a capital gain from a personal use asset is exempt from CGT if the asset was acquired for $10,000 or less (Section 118-10(3) of the ITAA 1997). You cannot make a capital loss from a personal use asset (Section 108-20(1) of the ITAA 1997). A personal use asset is a CGT asset, other than a collectable, that is kept or used mainly for your personal use and enjoyment. If personal use assets make up a set that would ordinarily be disposed of as a set, then the set makes up a single personal use asset. The exemption of $10,000 will apply to the set. Application to your circumstances The income you received in relation to your activity is not assessable under section 6-5 of the ITAA 1997 as ordinary income. You are merely realising your capital assets. You are not carrying on a business in relation to sale of the tree. The tree is a personal use asset and was acquired for less than $10,000. A capital gain on a personal use asset is exempt from CGT. You cannot make a capital loss on a personal use asset. Therefore the proceeds of the sale of the tree are not included in your assessable income.

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