They just missed out on a 50% CGT discount

[Risky Business]

I was just flicking through some recent PBRs and noticed this one.

http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/91503.htm

The gist of it is, the sale contract date was exactly one year after the purchase date and therefore did not meet the 12 month exemption.

This was part of the PBR. I wonder how much the error cost them.

Both the day of acquisition and the day on which the CGT event happens must be excluded in reckoning the 12 month period. So, a period of 365 whole days (or in a leap year 366 whole days) must elapse between the day on which the CGT asset was acquired and the day on which the CGT event happens.

In your circumstances, you did not hold your interest in the property for a period of more than 12 months.

Therefore, you are not entitled to apply the 50% cent discount on your interest in the property on the capital gain made upon its disposal.

There is no provision within the legislation that gives the Commissioner discretion to alter the 12 month rule.

 

[Perp]

Ouch! How annoying...

 

[ianvestor]

What if purchase settlement was in the morning and sale settlement in the afternoon 1 year later on the same date? Then technically you've held it for more than 12 months.

You'd have to be pretty desperate to actually choose not to wait the extra day anyway just to be safe.

 

[handyandy]

What if purchase settlement was in the morning and sale settlement in the afternoon 1 year later on the same date? Then technically you've held it for more than 12 months.

You'd have to be pretty desperate to actually choose not to wait the extra day anyway just to be safe.

"Both the day of acquisition and the day on which the CGT event happens must be excluded in reckoning the 12 month period. So, a period of 365 whole days (or in a leap year 366 whole days) must elapse between the day on which the CGT asset was acquired and the day on which the CGT event happens"

So both the purchase date and disposal date are excluded!!!

What I don't understand is that the property was intended to be the PPOR (once built) and they were now renting elsewhere so why was it even in the 50% CGT category as it should have been under the exemption.

Cheers

 

[jrc]

It was a vacant block of land. They had intended to build but moved before they built. It was never their PPOR

 

[marg4000]

This is another example of why it always pays to get advice before selling.

We were selling an IP and wanted it to be in the 2007/08 financial year so we could partially offset the CGT by maximum salary sacrificing. The agent arranged a buyer in the second-last week of June, and wanted us to sign the contract and he would hold it and add the date later.

We were not prepared to take the risk. Buyer and agent had to wait until the 3rd July (a Monday) when we all signed the contract after carefully checking the dates.
Marg