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Are boxes of matching floor tiles a set of personal use assets for the purposes of section 108-25 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No. The boxes of matching floor tiles are not a set of personal use assets for the purposes of section 108-25 of the ITAA 1997. The tiles would not ordinarily be sold as a set and the taxpayer did not dispose of them in separate transactions in order to obtain the exemption in section 118-10 of the ITAA 1997.

The taxpayer purchased a large number of marble floor tiles at an auction. The tiles were purchased for use in a property that the taxpayer owned and resided in. The taxpayer lived in the property for a number of years before leaving it vacant. The tiles were stored at the property during that time.

None of the tiles were actually used to tile the taxpayer's property. They were eventually sold to a number of different purchasers during the 2000 income year, some 7 years after the taxpayer acquired them.

A capital gain from a personal use asset, or part of the asset, is disregarded if the first element of the asset's cost base is $10,000 or less (subsection 118-10(3) of the ITAA 1997).

Subsection 108-25(2) of the ITAA 1997 provides that, if the conditions in subsection 108-25(1) of the ITAA 1997 are met, a set of personal use assets is taken to be a single personal use asset and each disposal is a disposal of part of the asset. This is relevant in determining whether the $10,000 exemption threshold in subsection 118-10(3) of the ITAA 1997 has been exceeded.

The conditions in subsection 108-25(1) of the ITAA 1997 are: (a) you own *personal use assets that are a set; and (b) they would ordinarily be *disposed of as a set; and (c) you dispose of them in one or more transactions for the purpose of trying to obtain the exemption in section 118-10.'

The tiles are considered to be personal use assets and were sold in more than one transaction. However, the tiles would not ordinarily be disposed of as a set and the taxpayer did not dispose of them in separate transactions for the purpose of obtaining the exemption. Accordingly, the conditions in subsection 108-25(1) of the ITAA 1997 are not satisfied and the exemption in subsection 118-10(3) of the ITAA 1997 applies. (Note: * an asterisked term is defined in the Dictionary starting at section 995-1 of the ITAA 1997)