Published: September 2017
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the capital gain you made on the disposal of a CGT asset be disregarded under paragraph 104-10(5)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: Other entities owned an asset. You and the other entities agreed that you would acquire the asset from them. You paid for the asset before the introduction of CGT. The asset was not transferred into your name until after the introduction of CGT. You made a capital gain when you disposed of the asset.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(1) | Income Tax Assessment Act 1997 subsection 104-10(3) | Income Tax Assessment Act 1997 paragraph 104-10(5)(a) | Income Tax Assessment Act 1997 subsection 109-5(2)

Reasons for decision: Summary: CGT event A1 - Disposal of a CGT asset CGT event A1 happens if an entity disposes of a CGT asset (subsection 104-10(1) of the ITAA 1997), such as when an asset is transferred from one entity to another by way of sale or gift. If the asset is disposed of under a contract, CGT event A1 happens when the contract is entered into, or if there is no contract, when the change of ownership occurs (subsection 104-10(3) of the ITAA 1997). If an asset is acquired as a result of CGT event A1 happening the asset is acquired when the disposal contract is entered into or, if none, when the disposing entity stops being the asset's owner (subsection 109-5(2) of the ITAA 1997). A capital gain you make is disregarded if you acquired the asset before 20 September 1985 (paragraph 104-10(5)(a) of the ITAA 1997). In your case, the evidence shows that you were the equitable owner of the asset before 20 September 1985. The other entities were holding the asset as trustees for the benefit of you. Therefore, for CGT purposes, you are considered to have acquired the asset before 20 September 1985. As such, the capital gain you made when you disposed of the asset is disregarded under paragraph 104-10(5)(a) of the ITAA 1997.