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Re: Gifting Capital Assets to Relatives

Initiate

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Replies 3

Hi,

 

If I genuinely gift the cgt assets, such as shares or rental properties, to my relatives, like my spouse or children, will the assets be deemed to be disposed of at market value so there is capital gain or loss?

 

Will the answer be different if the cgt assets are genuinely gifted to friends at no consideration?

 

Will the  answer be different if the cash are genuinely gifted to relative or friends at no consideration?

 

 

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Most helpful response

ATO Community Support

Replies 2

Hi @WilliamHu

 

Let's take the example of an investment property with full CGT applying.

If you gift that property to family or friends, or sell it to them for less than market value, you are considered to have received market value for the property for CGT purposes.

You will still have to declare the full capital gain as assessable income.

Same applies for shares.

 

Once you have converted your CGT assets into cash by disposing of them you are then able to gift the cash to family and friends and they don't need to declare it as income if it provided as a genuine gift. You will still need to declare the CGT loss or gain.

 

You can read more about transferring real estate to family or friends online.

 

RichATO

3 REPLIES 3

Most helpful response

ATO Community Support

Replies 2

Hi @WilliamHu

 

Let's take the example of an investment property with full CGT applying.

If you gift that property to family or friends, or sell it to them for less than market value, you are considered to have received market value for the property for CGT purposes.

You will still have to declare the full capital gain as assessable income.

Same applies for shares.

 

Once you have converted your CGT assets into cash by disposing of them you are then able to gift the cash to family and friends and they don't need to declare it as income if it provided as a genuine gift. You will still need to declare the CGT loss or gain.

 

You can read more about transferring real estate to family or friends online.

 

RichATO

Initiate

Replies 1

Hi @RichATO ,

 

Thanks for your answer. Another issue is that will there be deemed sales if I gift my company's trading stock to mt relatives?

 

For expample, I gifted a TV I sell in my company to my friend or relative. The maket value of the TV is $1000, cost is $800. So do I need to include the net profit $200 (1000-800) into my company tax return, or there the net result is $800 deductible loss?

 

Also, since the TV is given without consideration, should the sale be gst free, or I need to record $100 gst payable to ATO?

 

ATO Community Support

Replies 0

Hi @WilliamHu

 

When you take trading stock for private purposes (such as gift giving), you need to account for it as though it was sold in the course of business, and include that value in your taxable income.

 

In your example, this means you'd need to include the $1,000 in your assessable income. If you purchase the stock, you report an $800 expense.

 

If there's no payment received (including non-monetary payment), then it won't be a sale and therefore no GST is applicable.

 

You can read more about using trading stock for private purposes and taxable sales on our website.