Private ruling: CGT Disposal
Date of advice: 3 April 2019
Published: May 2019
Ruling period: 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the disposal of the taxpayer’s interest in the medical practice under the contract of sale result in the disposal of a CGT asset, and therefore CGT event A1 occurring under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes, having considered your circumstances and the relevant factors, the Commissioner agrees that this sale represents the sale of a CGT asset.

Relevant facts and circumstances: XYZ Pty Ltd (the taxpayer) and another company jointly owned the business (including goodwill) of a medical clinic, which trades as a medical practice. The company acquired its interest in this medical practice before 1985. A Contract of Sale was executed by the taxpayer for disposal of the business and the sale settled one month later. The sale price comprised of amounts for goodwill and plant and equipment. The doctors working at the clinic at the time of sale were required under the Contract of Sale to work in the business for a period of X months after which either party could terminate the work arrangement with two months’ notice. There was no further payment if a longer period of service w as worked, nor any refund or repayment of the purchase price if only three months service was provided. Under the Contract of Sale, the doctors working in the clinic after the sale were to receive a specified percentage of fees billed.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Subsection 104-10