Private ruling: Capital gains tax
Date of advice: 18 June 2019
Published: August 2019
Ruling period: Year ended 30 June 2020
Date scheme commenced: 20 September 1985

Ruling: Q1: Is any capital gain or capital loss you make from the sale of the two properties disregarded? | A1: Yes, as the change in share ownership does not change the status of the acquisition date, a capital gain or capital loss is disregarded from the disposal of the two properties as the assets remain pre-CGT assets.

Relevant facts and circumstances: The Company is incorporated The shares in the Company have are owned for the benefit of the ABC group. The ABC group consists of the following: · Taxpayer 1 (now deceased); · Taxpayer 2 - partner of taxpayer 1; · Taxpayer 3 - child of taxpayer 1 and taxpayer 2; · Taxpayer 4 - child of taxpayer 1 and taxpayer 2; · Taxpayer 5 - child of taxpayer 1 and taxpayer 2; and · Taxpayer 6 - child of taxpayer 1 and taxpayer 2. The Company has issued various classes of shares Upon incorporation the following shares were issued: A REDB C D E F Taxpayer 1 1 Taxpayer 2 1 Taxpayer 3 10 Taxpayer 4 10 Taxpayer 5 10 Taxpayer 6 10 The Company acquired a property before 1985 (Property 1) The Company acquired a property before 1985 (Property 2) There have been no capital improvements on either Property since September 1985 There have been no buildings or structure construction on either Property since September 1985 Property 1 and Property 2 are pre-CGT assets The ownership of the shares remained the same until the death of taxpayer 1 when the A Class shares were transferred to taxpayer 2 in accordance with a will. The ownership of the shares as that date changed to the following: A REDB C D E F Taxpayer 2 1 1 Taxpayer 3 10 Taxpayer 4 10 Taxpayer 5 10 Taxpayer 6 10 The family decided to rationalise the ownership of the shares. Taxpayer 2, taxpayer 3 and taxpayer 4 transferred ownership of their shares to Taxpayer 5 and taxpayer 6. The share ownership was then as follows: A REDB C D E F Taxpayer 5 1 10 10 Taxpayer 6 1 10 10 Property 1 current market value is $XXX Property 2 current market value is $XXX The properties will be sold in the 2020 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 160ZZS | Income Tax Assessment Act 1997 section 104-10(5)(a) | Income Tax Assessment Act 1997 section 149-15