Private ruling: Sale of real property
Date of advice: 1 June 2023
Published: 24 July 2023
Ruling period: 1 July 2021 to 30 June 2022
Date scheme commenced: The date this ruling is issued.

Ruling: Q1: Is the sale of the property a taxable supply in accordance with section 9-5? | A1: No. The sale of the property is not a taxable supply and GST is not payable on the sale. | Q2: Will the sale of the property be subject to capital gains tax regime? | A2: Yes. The sale of the property will be subject to the capital gains tax regime. | Q3: Will the taxpayer be eligible for the 50% CGT Discount? | A3: Yes. The Taxpayer will be eligible for the 50% CGT Discount.

Relevant facts and circumstances: You have an ABN; however, are not registered for GST. You purchased the property as vacant land and your original intention was to construct a residential premise for long term rent. The location of the property was attractive to you as it was close to the airport that is being built and you anticipated an increased demand for new rental properties in that area. Constant delays occurred as construction was during the period of #COVID19 restrictions. The property was completed without any fencing or landscaping as part of the building package. You advertised the property through a real estate agent cheaper than the prevailing market rate with other properties in the area, due to lack of fencing or landscaping. You reduced the rent due to no demand or interest in the property. During this period, you discovered building issues and mould on one of the walls in the property which was reported to the builder however it took them 2 months to remedy. Builder did not remove mounds of dirt and building debris from the site until XXXX. You were advised by the real estate agent that in order to rent the property it would need to be fully fenced and landscaping completed. If you decided to proceed with the landscaping and fencing it would have required borrowing additional funds and the bank would not have provided any additional funding. The real estate agent indicated that there was a demand for new properties in the area and that it might be better to sell it. You have since sold the property. You have not undertaken any previous property development activities.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 40 | A New Tax System (Goods and Services Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 40-75 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 108-5 | Income Tax Assessment Act 1997 section 115-25 | Income Tax Assessment Act 1997 section 118-20 | Income Tax Assessment Act 1997 section 104-10(4)

Reasons for decision: Summary: An entity makes a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if all of the following requirements are satisfied: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone; and (d) you are registered or required to be registered for GST However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In this case, the sale of the property will be made for consideration and the property is located in Australia. Therefore, paragraphs 9-5(a) and 9-5(c) are satisfied. The sale of the new residential premises is not a GST-free supply. Further it is not an input taxed supply as a sale of new residential premises is not an input taxed supply under section 40-65 of the GST Act. Therefore, we need to determine if the sale of the property is in the course or furtherance of an enterprise that you carry on and whether you are required to be registered for GST. | Detailed Reasoning - In the course or furtherance of an enterprise: The term enterprise is defined for GST purposes in section 9-20 of the GST Act and includes, among other things, an activity or series of activities done: • in the form of a business (paragraph 9-20(1)(a)) or • in the form of an adventure or concern in the nature of trade (paragraph 9-20(1)(b)). The phrase 'carry on' in the context of an enterprise includes doing anything in the course of the commencement or termination of the enterprise. Miscellaneous Taxation ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number (MT 2006/1) provides the Tax Office view on the meaning of 'enterprise' for the purposes of entitlement to an ABN. Goods and Services Tax Determination GSTD 2006/6 Goods and Services Tax: does MT 2006/1 have equal application to the meaning of 'entity' and 'enterprise' for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 , provides that the discussion in MT 2006/1 applies equally to the term 'enterprise' as used in the GST Act and can be relied on the GST purposes. | Detailed Reasoning - In the form of a business: Paragraphs 170 to 179 of MT 2006/1 discuss factors to consider when determining whether an activity or series of activities are done in the form of a business. Paragraph 178 of MT 2006/1, with reference to Taxation Ruling 97/11 Income tax: am I carrying on a business of primary production lists indicators of carrying on a business: • a significant commercial activity; • an intention of the taxpayer to engage in commercial activity; • an intention to make a profit from the activity; • the activity will be profitable; • the recurrent or regular nature of the activity; • the activity is systematic, organised and carried on in a business-like manner and records kept; • the activities are of a reasonable size and scale; • a business of product; and • the entity has relevant knowledge or skill. | Detailed Reasoning - In the form of an adventure or concern in the nature of trade: Paragraph 234 of MT 2006/1 provides that ordinarily, the term 'business' would encompass trade engaged in, on a regular or continuous basis. However, an adventure or concern in the nature of trade may be an isolated or one-off transaction that does not amount to a business but which has the characteristics of a business deal. Paragraph 244 of MT 2006/1 states: 244. An adventure or concern in the nature of trade includes a commercial activity that does not amount to a business but which has the characteristics of a business deal. Such transactions are of a revenue nature. However, the sale of the family home, car and other private assets are not, in the absence of other factors, adventures or concerns in the nature of trade. The fact that the asset is sold at a profit does not, of itself, result in the activity being commercial in nature. As adventures or concerns in the nature of trade involve trade, it is necessary to consider the meaning of trade. Paragraphs 258 to 260 of MT 2006/1 provide that certain type of assets, such as rental properties, business plant and machinery, the family home, family cars and other assets are considered as investment assets. These assets are purchased with the intention of being held for a reasonable period of time, as income-producing assets or for the pleasure or enjoyment of the person. The mere disposal of these investment and private assets does not amount to trade. Assets can change their character from investment to trade, however these assets cannot be held at the same time for both purposes. While an activity such as the selling of an asset may not of itself amount to an enterprise, account should be taken of the other activities leading up to the sale to determine if an enterprise is carried on. Paragraphs 262 to 302 of MT 2006/1 deal with isolated transaction and sales of real property. The ruling provides that often the question of whether an entity is carrying on an enterprise arises where there is a one-off activity or isolated real property transaction. The issue to be decided in such cases is whether the one-off activity is of a revenue nature (an enterprise) or a mere realisation of a capital asset. Similarly certain factors listed at paragraph 265 of MT 2006/1 can be used as indicators of whether or not there is an activity done in the form of a business or in the form of an adventure or concern in the nature of trade. These factors include whether: • there is a change of purpose for which the land is held, • additional land is acquired to be added to the original parcel of land, • the parcel of land is brought into account as a business asset, • there is a coherent plan for the subdivision of the land, • there is a business organisation (for example, a manager, office and letterhead), • borrowed funds financed the acquisition or subdivision, • interest on money borrowed to defray subdivisional costs was claimed as a business expense, • there is a level of development of the land beyond that necessary for council approval for the subdivision, and • buildings have been erected on the land. In determining whether activities relating to isolated transactions are an enterprise or the mere realisation of a capital asset, it is necessary to examine the facts and circumstances of each case. No single factor will be determinative. Rather it will be a combination of factors that will lead to a conclusion as to the character of the activities. | Detailed Reasoning - APPLICATION TO YOUR CIRCUMSTANCES: In your case, you bought the property with the intention of building a house to rent out long term. The build of the property was completed in XXXX, however, there was no fencing or landscaping included in the build contract. There were building issues and mould was discovered on one wall which took the builder 2 months to remedy. They also didn't remove mounds of dirt and building debris from the site until XX XXXX XXXX. The property was available for rent from XXXX, but you were unable to find a tenant as there was no interest in the property even with 2 decreases in the price. You were advised that in order to rent the property you would need to complete the fencing and landscaping. You already had an outstanding loan on the property that was close to the bank valuation obtained and you would be required to borrow additional funds to proceed with these works. As you had yet to receive any rental income, you didn't want to spend additional money on the property and potentially still have trouble finding a tenant. You decided to sell the property, as your real estate agent indicated that there was now a demand for new properties in the area and that it might be better off to sell the property. You have now sold the property. After weighing up all the facts of this case against the indicators above, there was insufficient commercial intention, the scale of your activities was small and you lacked any systematic organisation similar to a business. As such, we consider that your sale of the property will not be the sale of a trading asset of a business or an adventure or concern in the nature of trade. | Detailed Reasoning - GST registration: Section 23-5 of the GST Act provides that you are required to be registered for GST if you carry on an enterprise and your GST turnover meets the registration turnover threshold (currently $75,000). As mentioned above, it is considered that the sale of the property is not made in the course or furtherance of an enterprise that you carry on. As such, the turnover from the sale of the property is not included in the calculation of your turnover threshold and you are not required to be registered for GST. | Detailed Reasoning - CONCLUSION: Accordingly, the sale the property will not be a supply made in the course of furtherance of an enterprise that you carry on under section 9-20 of the GST Act. You are not required to register for GST. The sale of the property will not be a taxable supply in accordance with section 9-5 of the GST Act and you will not be liable for GST. | Detailed Reasoning - Questions 2 & 3: The profits or gains made from the disposal of real property can be assessed for income tax purposes in a number of ways, including: • as ordinary income under section 6-5 of the ITAA 1997, resulting from: - carrying on a business; or - an isolated or commercial transaction that was entered into with a profit-making intention; or • as statutory income pursuant to the capital gains tax (CGT) provisions in Part 3-1 and 3-3 of the ITAA 1997 (section 6-10 of the ITAA 1997. | Detailed Reasoning - Profits or gains made in the ordinary course of business: Taxation Ruling TR 92/3- Income tax : whether profits on isolated transactions are income (' TR 92/3 ') sets out the Commissioner's view on the application of the principles established in Federal Commissioner of Taxation v The Myer Emporium Ltd (1987) 163 CLR 199 (' Myer '). Paragraph 32 of TR 92/3 states that a profit or gain made in the ordinary course of a business includes: • a profit or gain arising from a transaction which is itself a part of the ordinary business of a taxpayer (judged by reference to the transactions in which the taxpayer usually engages); and • a profit or gain arising from a transaction which is an ordinary incident of the business activity of the taxpayer, although not a transaction entered into directly in its main business activity. In determining whether profits or gains made from the disposal of real property are made in the ordinary course of business, one must establish if a taxpayer is carrying on a business and what the nature of the business is. The definition of 'business' for income tax purposes is wide and includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee (subsection 995-1(1) of the ITAA 1997). The principles in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production ('TR 97/11') provide guidance on whether a taxpayer is carrying on a business and can be applied in various contexts. Specifically, paragraph 13 of TR 97/11 provides a list of indicators that are relevant in determining whether a taxpayer is carrying on a business. In general, the indicators are: • whether the activity has a significant commercial purpose or character; • whether the taxpayer has more than just an intention to engage in business; • whether the taxpayer has purpose of profit as well as a prospect of profit from the activity' • whether there is repetition and regularity of the activity; • whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business; • whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit; • the size, scale and permanency of the activity; and • whether the activity is better described as a hobby, a form of recreation or a sporting activity. No one indicator is decisive but rather different indicators must be considered in combination and as a whole. So, the question of whether a business is being carried on is determined in an objective manner based on the weighing up of all the relevant facts and circumstances of each case. In relation to property or land development, Taxation Determination 92/124: Income Tax: property development: in what circumstances is land treated as trading stock ('TD 92/124') recognises that repetitive buying and selling of property is not necessary to establish that a business of property acquisition, development and sale is being carried on. If a 'definite and continuous cycle of operations' has been initiated, a business of property development has commenced. Once it is established that there is a business, it then follows that the profits made in the ordinary course of carrying on that business constitute income. This principle has been discussed in many court cases, generally in the context of distinguishing between income and capital receipts. Californian Copper Syndicate (Limited & Reduced) v. Harris (1904) 5 T.C. 159 ('Californian Copper Syndicate') has been cited with authority in many Australian court cases as the leading case regarding these principles.(See for example, Westfield Limited v Commissioner of Taxation (1991) 28 FCR 333, Commissioner of Taxation (Cth) v Myer Emporium Ltd (1987) 163 CLR 199, London Australia Investment Company Limited v Federal Commissioner of Taxation 77 ATC 4398 and CMI Services Pty Ltd v Federal Commissioner of Taxation (1990) 90 ATC 4428). In Californian Copper Syndicate Lord Justice Clerk stated at 165-166 that: It is quite a well-settled principle in dealing with questions of assessment to income-tax, that where the owner of an ordinary investment chooses to realise it, and obtains a greater price for it than that for which he originally acquired it, the enhanced price is not profit...But it is equally well established that enhanced values obtained from realisation or conversion of securities may be so assessable, where what is done is not merely a realisation or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business. ...What is the line which separates the two classes of cases it may be difficult to define, and each case must be considered according to its facts, the question to be determined being, is the sum of the gain that has been made a mere enhancement of value by realising a security, or is it a gain made by an operation of business in carrying out a scheme for profit-making. In London Australia Investment Company Limited v Federal Commissioner of Taxation 77 ATC 4398 (' London Australia '), Gibbs J, in discussing the above principles, stated: Their Honours [in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation (1945) 73 CLR 604] went on to point out that not all of the proceeds of a business carried on by a taxpayer are income for the purposes of the [Income Tax Assessment] Act; they will be so only if they are income 'in accordance with the ordinary usages and concepts of mankind, except in so far as the Act states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income' (see at p. 615). However it is in my opinion established by this and many other cases in which Californian Copper Syndicate v. Harris has been applied that if the sale in question is a business operation, carried out in the course of the business of profit-making, the profit arising on the sale will be of an income character. To apply this criterion it is necessary 'to make both a wide survey and an exact scrutiny of the taxpayer's activities': Western Goldmines N.L. v. C. of T. (W.A.) (1938) 59 C.L.R. 729 at p. 740. Gibbs J also noted that the test in Californian Copper Syndicate is applicable to any business. Similarly, in Myer , the High Court stated that: Although it is well settled that a profit or gain made in the ordinary course of carrying on a business constitutes income, it does not follow that a profit or gain made in a transaction entered into otherwise than in the ordinary course of carrying on the taxpayer's business is not income. Because a business is carried on with a view to profit, a gain made in the ordinary course of carrying on the business is invested with the profit-making purpose, thereby stamping the profit with the character of income. | Detailed Reasoning - Isolated transaction with a profit-making intention: In some instances, a profit or gain made from an isolated or commercial transaction could constitute ordinary income if the taxpayer's purpose or intention in entering into the transaction was to make a profit, notwithstanding that the transaction was not part of its daily business activities. This was discussed in Myer , where the full bench of the High Court stated that: But a gain made otherwise than in the ordinary course of carrying on the business which nevertheless arises from a transaction entered into by the taxpayer with the intention or purpose of making a profit or gain may well constitute income. Whether it does depend very much on the circumstances of the case. Generally speaking, however, it may be said that if the circumstances are such as to give rise to the inference that the taxpayer's intention or purpose in entering into the transaction was to make a profit or gain, the profit or gain will be income, notwithstanding that the transaction was extraordinary judged by reference to the ordinary course of the taxpayer's business. Nor does the fact that a profit or gain is made as the result of an isolated venture or a "one-off" transaction preclude it from being properly characterized as income ( F.C. of T. v. Whitfords Beach Pty. Ltd . 82 ATC 4031 at pp. 4036-4037, 4042; (1982) 150 C.L.R. 355 at pp. 366-367, 376). The authorities establish that a profit or gain so made will constitute income if the property generating the profit or gain was acquired in a business operation or commercial transaction for the purpose of profit-making by the means giving rise to the profit. And further: The important proposition to be derived from [ Californian Copper Syndicate ] and [ Ducker v. Rees Roturbo Development Syndicate Ltd (1928) A.C. 132] is that a receipt may constitute income, if it arises from an isolated business operation or commercial transaction entered into otherwise than in the ordinary course of the carrying on of the taxpayer's business, so long as the taxpayer entered into the transaction with the intention or purpose of making a relevant profit or gain from the transaction. And further: The proposition that a mere realisation or change of investment is not income requires some elaboration. First, the emphasis is on the adjective "mere" ( Whitfords Beach , at ATC pp. 4046-4047; C.L.R. p. 383). Secondly, profits made on a realisation or change of investments may constitute income if the investments were initially acquired as part of a business with the intention or purpose that they be realized subsequently in order to capture the profit arising from their expected increase in value - see the discussion by Gibbs J. in London Australia , at ATC pp. 4403-4404; C.L.R. pp. 116-118. It is one thing if the decision to sell an asset is taken after its acquisition, there having been no intention or purpose at the time of acquisition of acquiring for the purpose of profit-making by sale. Then, if the asset be not a revenue asset on other grounds, the profit made is capital because it proceeds from a mere realisation . But it is quite another thing if the decision to sell is taken by way of implementation of an intention or purpose, existing at the time of acquisition, of profit-making by sale, at least in the context of carrying on a business or carrying out a business operation or commercial transaction. TR 92/3 also provides that profits from an isolated transaction will be income when: • the intention or purpose in entering into the transaction was to make a profit or gain, and • the transaction was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction. Even where the requisite intention may not exist on entering into the transaction, the High Court held in Whitfords Beach Pty Ltd v Federal Commissioner of Taxation (1983) 14 ATR 247 ( Whitfords ) there be a change of intention. In Whitfords there was a change of intention at the time a company holding a large parcel of land originally acquired for long-term investment, adopted a new set of articles that changed the intended usage of the land. In Rosgoe Pty Ltd v Commissioner of Taxation (2015) FCA 1231, Logan J reinforced that the intent at acquisition and later, on sale of the property should be considered separately and the transactions as distinct activities: When, later, the property was sold, the profit here arose not from the purchase but from the sale and because the sale was not part of the profit-making scheme the profit did not arise 'from the carrying on or carrying out' of that scheme. The intention and purpose needs to be carefully considered in each and every case. In Westfield v Commissioner of Taxation [1991] FCA 86 (' Westfield '), Hill J said: What was said in Myer has been applied in a number of cases in this court since. Among them are Moana Sand Pty Limited v Federal Commissioner of Taxation (1988) 88 ATC 4897, and Federal Commissioner of Taxation v Cooling (1990) 22 FCR 42. It does not, however, follow from the judgment in Myer , or for that matter, from the judgments in any later cases, that every profit made by a Taxpayer in the course of his business activity will be of an income nature. To so express the proposition is to express it too widely, and to eliminate the distinction between an income and a capital profit. The relevant intention or purpose of the taxpayer (of making a profit or gain) is the taxpayer's intention or purpose discerned from an objective consideration of the facts and circumstances of the case. Generally, in cases where a person's subjective purpose or intention is a relevant issue, the person's evidence as to their subjective purpose or intention can be considered but it must be tested closely, and received with the greatest caution. | Detailed Reasoning - Capital gain from mere realisation: For CGT to apply there needs to be a CGT event that happens to a CGT asset. A CGT asset is defined in section 108-5. Division 104 sets out the CGT events that can happen to a CGT asset and section 104-10 provides that CGT event A1 occurs on the disposal of an asset. As a consequence of CGT event A1, subsection 104-10(4) provides that you make a capital gain if the capital proceeds from the disposal are more than the assets cost base or conversely you make a capital loss if the capital proceeds are less than the assets reduced cost base. The mere realisation of a capital asset will be subject to the CGT provisions. Where the sale is a 'mere realisation' the sale is on capital account to which the CGT rules will generally apply. These proceeds are not ordinary income. The expression 'mere realisation' is used to distinguish a mere realisation from a business operation or a commercial transaction carrying out a profit-making scheme. In Westfield , the company was in the business of designing, constructing, letting and managing shopping centres. The company acquired land in the early 1970s and further land via an option which it subsequently sold and realised at a substantial gain. The Full Federal Court held that the disposal of land was on capital account as the necessary intention or purpose of making a profit on the sale of the land was absent. This was because the main aim of the company was to secure contracts to design, develop and operate/manage a shopping centre on the land. The disposal of the land was incidental to these purposes. The fact that the transaction was commercial or a business transaction was, of itself, insufficient. The Full Federal Court in reaching its decision considered the judgement in Myer and stated at 4241 that Myer 'emphasises that where a transaction occurs outside the scope of ordinary business activities, it will be necessary to find, not merely that the transaction is "commercial" but also that there was, at the time it was entered into, the intention or purposes of making a relevant profit'. Other aspects of the judgement in Westfield discussed when profits from transactions outside the ordinary course of business of an entity constituted ordinary income at 4243: Once it is clear that the activity of buying and selling, which generated the profit, was not an activity in the ordinary course of business, or, for that matter, an ordinary incident of some other business activity, the profit in question will only form part of the assessable income of the appellant, by virtue of its being income in accordance with the ordinary concepts of mankind, if the appellant had a purpose of profit-making at the time of acquisition. And further at 4243... While a profit-making scheme may lack specificity of detail, the mode of achieving that profit must be one contemplated by the taxpayer as at least one of the alternatives by which the profit could be realised. Such was the case in [Steinberg v Federal Commissioner of Taxation (1972-5) 134 CLR 640]. But, even if that goes too far, it is difficult to conceive of a case where a taxpayer would be said to have made a profit from the carrying on, or carrying out, of a profit-making scheme, where, in the case of a scheme involving the acquisition and resale of land, there was, at the time of acquisition, no purpose of resale of land, but only the possibility (present, one may observe, in the case of every acquisition of land) that the land may be resold. The same may be said to be the case where s. 25(1) of the Act is involved. As the court observed in Myer, in the passage already set out, the property, which generates the gain, must be acquired in an operation of business or commercial transaction: "... for the purpose of profit-making by the means giving rise to the profit." In determining whether a receipt is on revenue or capital account, the authorities establish that it is necessary to conduct "a wide survey and an exact scrutiny of the taxpayer's activities": Commissioner of Taxation v Stone (2005) 222 CLR 289 at [19]; Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 at 663 [69]; both citing Western Gold Mines NL v Commissioner of Taxation (WA) (1938) 59 CLR 729 at 740 per Dixon and Evatt JJ. This 'wide survey' is particularly important where the sale of the asset is by a taxpayer conducting a business. Jacobs J noted in London Australia at 127: The identification and characterisation of the business carried on by the taxpayer is the essential task. Under the principle in Grollo Nominees Pty Ltd v Commissioner of Taxation (1997) 73 FCR 452 at 514-515 there will be occasions when it is appropriate to take into account the activities of the broader group of which the taxpayer is a part. | Detailed Reasoning - Profits or gains made in the ordinary course of business: The nature and scale of the activities, together with the other indicators of business set out in TR 97/11 are satisfied and support the conclusion that the taxpayer is not in business . | Detailed Reasoning - Scope of the business: Sale of the property for profit is outside the ordinary course of the taxpayer's business. | Detailed Reasoning - Profit-making intention: The facts all indicate an intention to hold property for the purpose of renting and not profit-making by sale. | Detailed Reasoning - CONCLUSION: This leads to the conclusion the property was not acquired with the intention of profitmaking by sale, but rather to hold as a long-term investment for the purpose of gaining income from renting. The decision to realise the capital assets does not make the proceeds from the sale either income from a business activity or profits from an undertaking or scheme. The sale of the property is considered a mere realisation of capital assets and is subject to capital gains tax pursuant to subsection 104-10(4). As such section 118-20 will not operate to disregard the capital gain. | Detailed Reasoning - 50% capital gain discount: The capital gain arising from CGT event A1 is a discount capital gain and would be eligible for the 50% discount pursuant to section 115-25 of the ITAA 1997 when the capital gain resulted from a CGT event happening to a CGT asset that was acquired at least 12 months before the CGT event. The property was held for more than 12 months. Accordingly, any capital gain arising from CGT event A1 is a discount capital gain and eligible for the 50% discount. The capital gain on the sale of the interest in the property taxpayer acquired more than 12 months before the disposal will be the discount capital gain.