Private ruling: Capital gains tax
Date of advice: 13 October 2016
Published: January 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will you be liable for capital gains tax (CGT) on the sale of your precious metal ingots purchased for investment purposes? | A1: Yes.

Relevant facts and circumstances: You are considering purchasing a small quantity of ingots. They will be purchased in bar form, not in collectable form.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20, | Income Tax Assessment Act 1997 Section 108-5 and | Income Tax Assessment Act 1997 Section 108-20 .

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you can make a capital gain or loss if and only if a CGT event occurs. The most common CGT event, CGT event A1, occurs when you dispose of a CGT asset to someone else, for example, if you sell a property. A CGT asset is defined in section 108-5 of the ITAA 1997 as any kind of property, or a legal or equitable right that is not property. A personal use asset is defined in section 108-20 of the ITAA 1997 and includes a capital gains tax (CGT) asset (excluding a collectable) that is used or kept mainly for your personal use and enjoyment. Examples of personal use assets include clothing, cameras, televisions and furniture. Generally, the purchase of precious metals or ingots is made for investment purposes and capital growth. They are not being kept for personal use and enjoyment, therefore they are considered a CGT asset and subject to the CGT provisions. Additional information: For more information about CGT, please refer to Capital Gains Tax guide which can be found on the Tax Office website by searching “QC 22147”.