Private ruling: CGT - active assets
Date of advice: 8 April 2024
Published: 20 May 2024
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Were the shares you held in Company A active assets, satisfying subsection 152-40(3) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Subsection 152-40(3) of the ITAA 1997 provides that a share in a company that is an Australian resident can be an active asset where: • the market values of the active assets of the company; and • the market value of any financial instruments of the company that are inherently connected with a business that the company carries on; and • any cash of the company that is inherently connected with such a business; • is 80% or more of the market value of all the assets of the company. In this case, more than 80% of the assets of the company at the time of the financial statements are active assets. Therefore, your shares in Company A are considered active assets at that time.

Relevant facts and circumstances: You purchased shares in a company. You received dividends which were based on the performance of a related company of which you were employed. You have now sold the shares. The financial reports of the company showed that over 80% of their assets were active assets.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 152-40(3)