Private ruling: CGT - disposal - personal use asset
Date of advice: 21 December 2017
Published: May 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are the profits received from the sale of your collection accounted for under the capital gains tax provisions and exempt under subsection 118-10(3) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: You own a collection. The collection was owned by you and has been collected over many years. You have decided to sell your collection as there is a significant financial risk associated with keeping the collection. You have also lost interest in continuing to collect. You have sought expressions of interest to sell the collection. You received an expression of interest from a buyer who has purchased some of the collection and you hope to sell the remainder to the same buyer in the near future.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 108-10(2) | Income Tax Assessment Act 1997 section 108-20 | Income Tax Assessment Act 1997 section 108-25 | Income Tax Assessment Act 1997 subsection 118-10(3)

Reasons for decision: Summary: A personal use asset is defined in subsection 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. The collection had been acquired over many years from various sources and items were generally acquired individually. The collection was held for your personal enjoyment. Accordingly, the collection is considered personal use assets as defined in subsection 108-20 of the ITAA 1997. Section 108-25 of the ITAA 1997 provides that where you dispose of personal use assets individually that are part of a set and would ordinarily be disposed of as part of a set, the exemption contained in section 118-10 of the ITAA 1997 will only apply where the set was acquired for less than $10,000. Any capital gain you make from the disposal of a personal use asset is disregarded where the first element of its cost base is less than $10,000 (subsection 118-10(3) of the ITAA 1997). In your case none of the items in your collection were acquired for more than $10,000, therefore you can disregard any capital gain you make from their disposal. We do not consider that the proceeds from the sale are income from a business or isolated profit making transaction.