EV 1052238038561currentnon-binding advice

CGT - active assets

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1

Were the shares you held in Company A active assets, satisfying subsection 152-40(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?

2

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. This ruling applies for the following period : Year ended 30 June 20YY The scheme commenced on: 1 July 20YY

3

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.

4

Income Tax Assessment Act 1997 subsection 152-40(3)