Private ruling: Capital gains tax - disposal
Date of advice: 23 May 2016
Published: July 2016
Ruling period: 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Did the sale of the company B shares for capital gains tax purposes occur in the 2014-15 financial year? | A1: Yes.

Relevant facts and circumstances: In the 2014-15 financial year the demerger between company A and company B was completed. You received one company B share for each company A share held. You were given your company B shares by way of an in-specie distribution. A sale facility was made available for eligible shareholders to sell their company B shares. You were eligible for this sale facility. You elected to sell a certain amount of company B shares through the sale facility. The election was made prior to the deadline which occurred in the 2014-15 financial year. In the 2015-16 financial year, company A announced the completion of the sale facility. In the 2015-16 financial year, you received the proceeds from sale of company B shares.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10.

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) explains that CGT event A1 occurs if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity. Section 104-10 of the ITAA 1997 continues to explain that the time of the CGT event is when you enter into the contract for the disposal or if there is no contract, when the change of ownership occurs. In your case you entered into the sale facility (the contract) by dd/mm/yyyy to dispose of your shares. Therefore the date of disposal for CGT purposes is the date you entered into the sale facility agreement. As you entered into the agreement by the dd/mm/yyyy deadline, the disposal date for CGT purposes would've fallen in the 2014-15 financial year.