Private ruling: Capital gains tax
Date of advice: 4 February 2021
Published: March 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the transfer of the shares from your parent's name into your name give rise to a Capital gains Event? | A1: No.

Relevant facts and circumstances: Your parents have a portfolio of shares held in trust in their names for you. Your parent received an amount of money from your relative's estate which was to be invested on your behalf and held in trust for you. You wish to transfer these shares into your name. You intend on making the transfer of shares in the 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20

Reasons for decision: Summary: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer makes a capital gain or loss as a result of a capital gains tax (CGT) event happening to a CGT asset. CGT assets include shares acquired on or after 20 September 1985. A taxpayer makes a capital gain if their capital proceeds from the sale of a CGT asset are greater than the cost base for the purchase of that asset, for example, if a taxpayer received more for an asset than they paid for it. A taxpayer makes a capital loss if their reduced cost base for the purchase of that asset is greater than the capital proceeds resulting from the sale of that asset. Capital gains tax is not a separate tax, it forms part of a taxpayer's assessable income and is taxed at each taxpayer's marginal tax rate. The transfer of ownership in shares results in a CGT event occurring. This is CGT event A1. You intend on transferring shares which are currently held in trust for you by your parents into your name. This transfer will result in CGT event A1 occurring and will result in a capital loss or gain. There is no discretion under the income tax law to exempt any capital gain or loss from occurring in relation to this transfer.