Private ruling: Capital gains tax
Published: July 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for the storage fees associated with your investment? | A1: No. | Q2: Will the storage fees associated with your investment form part of the cost base for capital gains tax purposes? | A2: 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. Your investments are stored overseas. Storage costs are deducted each month. This deduction occurs monthly.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1, | Income Tax Assessment Act 1997 Section 103-5, | Income Tax Assessment Act 1997 Section 110-25 and | Income Tax Assessment Act 1997 Subsection 110-45(1B).

Reasons for decision: Detailed Reasoning - Deductions: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature. In determining the deductibility of the storage fees we have to determine whether or not the investment has an intrinsically revenue character. As you are not currently operating a business of trading in this investment, your investment is considered to be capital in nature. It follows that the storage fees associated with the investment are also capital in nature. Therefore, no deduction is allowable for the storage fees as the expense is capital in nature. | Detailed Reasoning - Capital gains tax: The cost base of a CGT asset is defined in section 110-25 of the ITAA 1997. It consists of five elements. The third element is the non-capital cost of owning a CGT asset if it was acquired after 20 August 1991. These costs include; interest on money you borrowed to acquire the asset, costs of maintaining, repairing or insuring it; and council rates. Subsection 110-45(1B) of the ITAA 1997 states that expenditure does not form part of the second or third element of the cost base to the extent that you have deducted or can deduct it. In your case, as they are not allowed as a deduction, the storage fees associated with the investment may be included in the cost base of your investment.