Private ruling: Capital gains tax
Published: September 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Can any capital gain or loss made on the transfer of the property for no consideration to a special disability trust within the meaning of the Social Security Act 1991 be disregarded? | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You have a disability. As a result of an inheritance, your sibling purchased a property for income producing purposes (the property). There is formal documentation stating that your sibling holds the property as trustee for you. You are currently being assessed in order to establish a 'special disability trust' (SDT) within the meaning of the Social Security Act 1991 . Upon establishment of the SDT, the property will be transferred to the SDT.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-5. | Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Section 104-10. | Income Tax Assessment Act 1997 Section 108-5. | Income Tax Assessment Act 1997 Section 116-30. | Income Tax Assessment Act 1997 Section 118-85. | Income Tax Assessment Act 1997 Section 995-1.

Reasons for decision: Summary: Generally, any assessable gain made from a capital gains tax (CGT) event is included in your assessable income in the income year in which the event happens. However, in some cases an exemption may apply that allows a taxpayer to reduce, or disregard (and therefore not include in their assessable income), any gain or loss made as a result of a CGT event. Where applicable, such exemptions are provided for by the tax law. Section 118-85 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you can disregard any capital gain or loss made on the transfer of CGT asset for no consideration to a 'special disability trust'. According to the definition of a 'special disability trust' in section 995-1 of the ITAA 1997, for the exemption provided by section 118-85 of the ITAA 1997 to apply to the transfer of a CGT asset, the transfer must be to a 'special disability trust' within the meaning of the Social Security Act 1991 . Any gain or loss made on the transfer of the property to a 'special disability trust' within the meaning of the Social Security Act 1991 will be disregarded.