Private ruling: Loss of shares - rollover relief
Date of advice: 26 July 2022
Published: November 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you eligible for the capital gains tax (CGT) rollover under paragraph 124-70(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) for the inadvertent sale of your shares conducted in error? | A1: Yes. Your financial adviser made a sale of your shares without your consent; therefore, the shares were 'lost' to you, which is a situation described in section 104-20 of the ITAA 1997 as CGT event C1. CGT event A1 also occurred as it was a disposal of a CGT asset, however subsection 102-25(1) of the ITAA 1997 states that if the situation can be defined by more than one CGT event, you should use the event which is most accurate to your circumstances, which is CGT event C1 in your case. As you received replacement shares for the inadvertently sold parcel, you are eligible for the CGT rollover relief for the inadvertent sale and corresponding repurchase of the equivalent number of shares, as provided for under paragraph 124-70(1)(b) of the ITAA 1997.

Relevant facts and circumstances: You own an investment portfolio comprising Australian listed shares. Your investment portfolio is managed by a financial planning firm. Your financial planning firm processes share purchase and sale transactions using a managed fund broker's software platform. Under your instruction your financial planning firm lodged a sell order for a number of your shares via the broker's software platform. The software platform indicated that the sell order had expired unfulfilled, leading your financial planning firm to believe that the sale had not executed. The next day your financial planning firm lodged a sell order for another parcel of shares, approximating the dollar value of the previous sell order under the mistaken belief that the previous order had expired without being executed. Upon becoming aware of the error your financial planning firm notified the fund broker of the error and arranged to repurchase the shares. Your financial planning firm's shares team repurchased shares to credit to your account.

Relevant legislative provisions: Income Tax Assessment Act section 102-25 | Income Tax Assessment Act subsection 102-25(1) | Income Tax Assessment Act section 104-20 | Income Tax Assessment Act section 124-70 | Income Tax Assessment Act paragraph 124-70(1)(b)