Private ruling: Disposal of shares
Published: September 2012
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Where you have the same class of shares in the same company purchased with different cost bases, can you nominate which shares to dispose of rather than dispose of shares on a first-in-first-out basis? | A1: Yes

Relevant facts and circumstances: You own shares in a company which were purchased on different dates over a number of years. You may decide to sell the shares most recently purchased. You buy and sell shares using an on-line broker.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-5

Reasons for decision: Summary: CGT Determination Number 33 is applicable to taxpayers who acquire shares as capital assets. It provides, on the disposal of shares which form part of a holding of identical shares, taxpayer's will need to decide which particular shares are being disposed of and keep adequate records of the transaction. It states: …on the disposal of shares which form part of a holding of identical shares i.e. of the same class and in the same company, which are acquired over a period of time…the taxpayer will need to decide which particular shares are being disposed of. Taxpayers in this situation will need to keep adequate records of the transaction so that the decision can be supported should the income tax return be subject to Tax Office scrutiny at a later date. For CGT purposes, the Commissioner will…accept the taxpayer's selection of the identity of shares disposed of. TD33 clarifies the Commissioner will accept 'first in, first out' as a reasonable basis of identification where unidentifiable shares are being disposed of. In your case, as you use an on-line broker and this would provide you with adequate records to allow you to identify and nominate the particular shares disposed of.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.