Tey and Commissioner of Taxation

[2004] AATA 1210

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1210

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   WT2004/27

TAXATION APPEALS DIVISION		)
Re		KOK YONG TEY

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal   Associate Professor G A Barton, Member

Date  17 November 2004

Place  Perth

Decision   The Tribunal affirms the decision under review.

...........(sgd G A Barton)......................

Member

CATCHWORDS

Income tax – capital gain – net capital gain – former spouses joint tenants of a block of land – tenants in common for purposes of capital gains provisions of Income Tax Assessment Act 1997 – sale of land pursuant to a court order under the Family Law Act 1975 – transfer to third party – capital gain not to be disregarded in calculating net capital gain for income year.

Income Tax Assessment Act 1977              ss 108-5, 108-7, 126-5

REASONS FOR DECISION

17 November 2004  Associate Professor G A Barton, Member

1. The applicant, Ms Kok Yong Tey, gave evidence and represented herself at the hearing of her application. The Tribunal had a copy of her statement of facts and contentions and, with the leave of the Tribunal, she lodged written submissions after the hearing on 12 November 2004. The Tribunal had documents T1 to T11, lodged by the respondent in terms of s.37 of the Administrative Appeals Tribunal Act1975, and a copy of the respondent’s statement of facts and contentions.  The respondent was represented by Mr Frank Maloney of the respondent’s Legal Services Branch.

2.      The applicant and her former husband were the joint owners of a block of land which they acquired after 19 September 1985.  They sold the land to an unrelated third party pursuant to an order of the Family Court of Australia (T3) during the income year ended 30 June 2002.

3.      It was not disputed that the land was a CGT asset for the purpose of s. 108-5 of the Income Tax Assessment Act 1997 (‘the Act’), that by s. 108-7 of the Act the applicant and her former spouse were treated as tenants in common of the land and that, for the purposes of the Act, they each derived a capital gain in the amount of $31,975 from the sale of the land.

4.      In the case of the applicant, the capital gain of $31,975 was also her net capital gain for the income year ended 30 June 2002 and so it was included in her assessable income for income tax purposes for that year (T8).

5. In her notice of objection of 15 September 2003 (T9), the applicant objected to her assessment to income tax of 1 May 2003 (T5) and her amended assessment to income tax of 17 July 2003 (T8), in respect of the year ended 30 June 2002, because she contended that the capital gain of $31,975 should have been disregarded in calculating her net capital gain for that year. She relied on s.126-5(1)(a) and other unspecified sections of the Act.

6. S. 126-5 of the Act provides roll-over relief where certain CGT events happen involving transfers of assets between spouses or former spouses because of a court order under the Family Law Act 1975. The sale in this matter involved a transfer of the land from the applicant and her former husband to a third party and so the capital gain is not disregarded in terms of s. 126-5(4).

7.      There are no other sections in the Act under which the capital gain from the sale of land in this matter is to be disregarded for the purposes of the Act.

8.      The Tribunal finds that the capital gain of $31,975 from the sale of the applicant’s interest in the land was correctly included in the calculation of her net capital gain for the income year ended 30 June 2002 and so she has failed to prove, on the balance of the probabilities, that her amended assessment for that year is excessive.   

9.      The Tribunal affirms the decision under review.

I certify that the 9 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor G A Barton, Member

Signed:         .............(sgd V Wong).................................
  Associate

Date/s of Hearing  3 August 2004
Date of Decision  17 November 2004
Counsel for the Applicant         In person
Counsel for the Respondent     Mr F Maloney
Solicitor for the Respondent     Australian Taxation Office Legal Services