Private ruling: Capital gains tax - discount capital gain
Date of advice: 5 August 2017
Published: November 2017
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Is the trustee entitled to apply the 50% capital gains tax (CGT) discount to the capital gains arising from the sale of the investment properties? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 subdivision 115- A. | Income Tax Assessment Act 1997 section 118-110.

Reasons for decision: Summary: For any capital gain the trust is liable for on the disposal of the properties, the trust qualifies for discount capital gains. Under section 115-10 of the ITAA 1997, to qualify for the 50% general discount a capital gain must be made by an individual, a complying superannuation entity, a trust or a life insurance company. The capital gain must result from a CGT event happening after 11:45am on 21 September 1999 and must not have an indexed cost base. Also, the gain must result from a CGT event happening to an asset that was acquired at least 12 months before the CGT event. In your case, the acquisition date for the purposes of calculating CGT for the properties is more than 12 months before the CGT events. Accordingly, if the CGT event results in a capital gain, as a trust you are entitled to apply the 50% general discount to the capital gain.

Relevant facts: The trustee of the 'X’ Family Trust is 'Y’ Pty Limited. | The trust was established prior to 20 September 1985. | The sole director of the Trustee was 'Z’. | 'X’ acquired a number of properties pre and post CGT. | Property 'A’ was acquired prior to 20 September 1985. | A number of properties were acquired after 19 September 1985 | The majority underlying interest in the trust has not changed. | The trustee will not undertake any subdivision of the properties prior to sale.