Private ruling: Capital gains tax - capital proceeds - relocation allowance
Date of advice: 6 October 2017
Published: February 2018
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Will the allowance received form part of the capital proceeds received from the sale of the property? | A1: Yes

Relevant facts and circumstances: You owned the property. The property was not your main residence. You entered into a contract to sell the property on XX December 20XX to P Pty Ltd. As part of the settlement, an allowance amount of $X was paid by P Pty Ltd in addition to the contract price of $X. In the contract of sale under the heading ‘Additional Completion payment’ at clause XX, the allowance amount of $X is described as follows: ‘On and subject to Completion the Purchaser must pay the Vendor the sum of $X as an allowance for the Vendor’s costs of relocating from the Property’

Relevant legislative provisions: Income Tax Assessment Act 1997 , section 116-20 | Income Tax Assessment Act 1997 , subsection 116-20(1)

Reasons for decision: Summary: Section 116-20 of the Income Tax Assessment Act 1997 provides the general rules about capital proceeds. Subsection 116-20(1) provides that capital proceeds from a Capital Gains Tax (CGT) event are the total of: (a) the money you have received, or are entitled to receive, in respect of the event happening; and (b) the market value of any other property you have received, or are entitled to received, in respect of the event happening. The allowance payment is included in the capital proceeds for the sale of your property as it is an amount received in respect of the CGT event happening, that is the disposal of the property.