Private ruling: Capital Gains Tax (CGT) - Pre-CGT acquisition
Published: October 2011
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Will any capital gain or capital loss made on the disposal of the property be disregarded? | A1: Yes.

Relevant facts and circumstances: You currently jointly own the property. The original sale contract states you jointly purchased the property prior to 20 September 1985. For the purpose of this ruling you will dispose of the property sometime between 1 July 2011 and 30 June 2013.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 108-5 | Income Tax Assessment Act 1997 Section 109-5

Reasons for decision: Summary: Capital Gains Tax (CGT) event A1 will happen when you dispose of the property sometime between 1 July 2011 and 30 June 2013. You make a capital gain if the capital proceeds from the disposal are more than the asset's cost base. You make a capital loss if those capital proceeds are less than the asset's reduced cost base. A capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985 (pre-CGT asset). Generally, you acquire a CGT asset when you become its owner. You may acquire a CGT asset when someone else has a CGT event (for example, the transfer of land to you under a contract of sale). If you acquired an asset because of a CGT event, you are generally taken to have acquired the asset at the time of the CGT event. For example, if you enter into a contract to purchase a CGT asset, the time of acquisition is when you enter into the contract. In your case, as you entered into a contract to purchase the property, the time of acquisition is when you entered into the contract. As the property was acquired before 20 September 1985 it is a pre-CGT asset and any capital gain or capital loss made on the disposal of the property will be disregarded.

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