Private ruling: CGT disposal
Published: March 2014
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can accumulated carry forward income tax losses be applied to a net capital gain made on the sale of a CGT asset? | A1: Yes.

Relevant facts and circumstances: You held an investment property which has accumulated losses. You have now sold the property making a capital gain.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 100-10(1)

Reasons for decision: Summary: Section 100-10(1) of the Income Tax Assessment Act 1997 states that CGT affects your income tax liability because your assessable income includes your net capital gain for the income year. Your net capital gain is the total of your capital gains for the income year, reduced by certain capital losses you have made. Therefore, income tax losses cannot be used to reduce a capital gain in calculating your net capital gain. However, as your net capital gain will become your assessable income, your carried forward income tax losses will be automatically offset against your assessable income, in calculating your net taxable income.