Analysis of CGT Event and Property & Share Sales in Taxation Law

This report analyzes the application of taxation law, specifically focusing on Capital Gains Tax (CGT) events related to property and share sales. The report references key legal precedents such as FCT v Sara Lee Household & Body Care P/L (2000) and McDonald v FCT (1998) to determine the timing and implications of CGT events. It discusses a scenario involving the sale of an investment property on June 14, 2018, and the subsequent application of Section 104-10 ITAA 1997, calculating the taxable capital gains. Additionally, the report analyzes the sale of shares, determining the CGT event date based on the transfer of share scripts to the stock exchange, referencing Section 102-5 ITAA 1997 and the timing of asset disposal. This analysis highlights the importance of understanding CGT rules in financial transactions and the role of case law in their interpretation.

Taxation Law

Timing of CGT Event
 At the time of ascertaining the CGT event reference to case of “FCT v
Sara Lee Household & Body Care P/L (2000)” is made.
 The applicable agreement of sale characterizes the source of
obligation to carry-out the transfer of asset that amounts to relevant
sale.
 If it is found to be difficult in recognizing the sole contract under
which the sale happens, then the time is when the ownership of asset
changed.
 A taxpayer may engage in sale or get into a contract despite the fact
that the transferee is not regarded as the party to the contract.

Sale of Investment Property
 In the year 2018 on 14th June the property was sold for a market value of
$1.3 million. Accordingly, a CGT event A1 happened under “sec 104-10
ITAA 1997” when Harrison disposed the investment property.
 Referring to the case facts of “McDonald v FCT (1998)” the sales
proceeds derived from sale of investment property is a taxable capital
gains (Pinto, Kendall and Sadiq 2018).
 With reference to the “sec 102-5 ITAA 1997” the amount will be
included in the assessable income of Harrison and will attract CGT for the
year 2018.

Sale of Share Portfolio
 The shares were purchased by him in October 1985 and will be
categorized as “Post-CGT Asset”.
 On 20th June 2018, Harrison signed the share transfer document and
the transfer as well as the share script was handed to stock exchange
on 20th June 2018.
 Referring to “FCT v Sara Lee Household & Body Care P/L
(2000)” there was an exchange of ownership on 20th June when
Harrison transferred the share script to stock exchange.
 Hence, the timing of the “CGT event A1” under “sec 104-10 ITAA
1997” will be 20th June 2018 because the title of asset was disposed
on the aforementioned date.

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