Private ruling: Capital gains tax
Published: March 2014
Ruling period: Financial year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and Answer | Does the Commissioner of Taxation have the discretion to apply a capital loss against income which is not capital in nature? | No

Relevant facts and circumstances: You bought a property after 1985. You sold the property, incurring a capital loss in this financial year. You advise that you will not be investing in any property in the future.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-10

Reasons for decision: Summary: You make a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include real estate acquired on or after 20 September 1985. You make a capital gain if your capital proceeds from the sale of a CGT asset are greater than the cost base for the purchase of that asset. You make a capital loss if your reduced cost base for the purchase of that asset is greater than the capital proceeds. You made a capital loss upon disposal of your property. Capital losses that are incurred in an income year can be offset against capital gains derived in the same year. Alternatively, capital losses may be carried forward as net capital losses without a time limit and offset against capital gains realised in subsequent years. A current year net capital loss is not deductible in its own right and cannot be offset against revenue gains in calculating taxable income: section 102-10(2) of the ITAA 1997 There is no provision in the legislation which gives the Commissioner of Taxation discretion to offset a capital loss against other sources of income so he is unable to allow you to offset your capital loss against your income. To this end, your capital loss will be carried forward until it can be applied against future capital gains.