Private ruling: CGT - exemptions
Date of advice: 25 October 2023
Published: 11 December 2023
Ruling period: Financial Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Can the Commissioner disregard any capital gain or loss you make on the disposal of your investment property? | A1: No.

Relevant facts and circumstances: The Property was purchased on DD MM 20YY at $X. The Property was used an investment property. You had a medical condition that was confirmed by your doctor. The medical condition disabled you to work full time for the last XX years. You had done some piece work for employment. One year after your diagnosis, you applied for Centrelink unemployment benefits and the disability support pension, but you did not qualify. The Property was sold on DD MM 20YY for $X. The Property was sold to finance your living.

Relevant legislative provisions: Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 section 104-10

Reasons for decision: Summary: The sale of the rental property is a disposal of a capital gains tax (CGT) asset. This has triggered CGT event A1 occurring under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Detailed reasoning: Section 104-10 of the Income Tax Assessment Act (ITAA 1997) states that CGT event A1 will happen if you dispose of a CGT asset. A capital gain or loss may be disregarded if it was purchased before 20 September 1985 or another exemption is available. In your case, the property was purchased after 20 September 1985 and the property was always used for income producing purposes. There is no other exemption under the general CGT provisions. The Commissioner does not have the discretion to disregard any capital gain or loss you make due to the disposal of an investment property. The rental income received by the property was assessable income, therefore the disposal of the property will also be included in your assessable income. Having considered the relevant facts, CGT event A1 occurred due to your disposal of the rental property. As there is not exemption from CGT, the normal CGT rules will apply to the disposal of the property. You should note that you are also entitled to the 50% CGT discount in relation to the property because you owned it for more than 12 months.