document_title: Regency Acts

question_text: who rules if the king is too young

question_tokens: who rules if the king is too young

root

text: Regency Acts

text: History[edit]

text: Prior to 1937, there was no permanent, general provision in British law for a regent to be appointed if the British monarch were incapacitated or absent from the country. Nor was there a general provision for a regent to rule on behalf of an heir apparent or heir presumptive who succeeded to the throne as a minor. Before the Glorious Revolution, it was up to the sovereign to decide who would be regent in any event, although this decision was often implemented by legislation.  For example, section XI of the Treason Act 1554 made King Philip, husband and co-ruler of Queen Mary I, regent in the event that Mary died and her heir was male and under 18, or an unmarried female under 15.

tag: p

text: By the Act of Settlement 1701, Parliament passed the line of succession to Electress Sophia of Hanover; this decision was confirmed and extended to all of Great Britain by the Acts of Union 1707. With the doctrine of Parliamentary supremacy firmly established in British law, it became possible for Parliament to pass legislation to determine who would act as regent during the absence, incapacity or minority of the ruling monarch.[citation needed] Since then several Regency Acts have been passed.

text:
Notable British regents

 Sir Thomas ParkerAugust–September 1714

 Prince George (future George II)[1]1716–1717

 Queen Caroline[1]May–September 1729June–September 1732May–October 17351736–1737

 Prince George (future George IV)[1]1811–1820

tag: ul

text: Regency Act 1705 and Succession to the Crown Act 1707[edit]

text: With the passage of the Act of Settlement 1701 establishing the Protestant Succession and making Sophia of Hanover heiress to the throne, it became likely that upon Anne's death the country would be without a monarch-in-residence. The Regency Act 1705 was passed "to put it [the succession] in such a method as was not to be resisted but by open force of arms and a public declaration for the Pretender".[2] The Act required privy counsellors and other officers, in the event of Anne's death, to proclaim as her successor the next Protestant in the line of succession to the throne, and made it high treason to fail to do so. If the next Protestant successor was abroad at the death of Anne, seven great Officers of State named in the Act (and others whom the heir-apparent thought fit to appoint), called "Lords Justices," would form a regency. The heir-apparent would name these others through a secret instrument which would be sent to England in three copies and delivered to the Hanoverian Resident, the Archbishop of Canterbury and the Lord Chancellor.[3] The Lords Justices were to have the power to give royal assent to bills, except that they would be guilty of treason if they amended the Act of Uniformity 1662.

text: Two years later, after the union of Scotland and England, the new Parliament of Great Britain passed the Succession to the Crown Act 1707, reaffirming the above procedure and modifying it slightly. Under the act, if the monarch died while the heir to the throne was overseas, the government would be run until the new monarch returned by between seven and fourteen "Lords Justices." Seven of the Lords Justices were named in the Act, and the next monarch could appoint seven more, who would be named in writing, three copies of which were to be sent to the Privy Council in England.[4] The Act made it treason for any unauthorised person to open these, or to neglect to deliver them to the Privy Council.[5] The Lords Justices were to have the power to give royal assent to bills, except that they would be guilty of treason if they amended the Act of Uniformity 1662 or the Protestant Religion and Presbyterian Church Act 1707.[6]

text: Upon Queen Anne's death in 1714, George I, the new king, was in his home realm of Hanover. In accordance with the Succession to the Crown Act, Thomas Parker, Lord Chief Justice, became head of the regency. He served for a little over a month.[1]

text: Regency Act 1728[edit]

text: The second Act passed by the Parliament of Great Britain to deal exclusively with a regency was in 1728, the Regency During the King's Absence Act 1728 (2 Geo. 2 c. 27). The Act specified that Queen Caroline would act as regent in the absence of her husband King George II rather than the Prince of Wales, whom he despised.  The Act was necessary because George II was also Elector of Hanover and was returning to his homeland for a visit.

text: Minority of Successor to Crown Act 1751[edit]

text: In 1751, Frederick, Prince of Wales, the eldest son and heir apparent of King George II, died.  This left Frederick's eldest son, Prince George, as the new heir apparent.  But George was only 12 at the time of his father's death.  If the King were to die before Prince George turned 18, the throne would pass to a minor.

text: Consequently, Parliament made a provision for a regent by passing the Minority of Successor to Crown Act 1751 (24 Geo. 2 c. 24).[a] This Act provided that George's mother,  Augusta, Dowager Princess of Wales, would act as regent.  The Act also specified that a Council of Regency be put in place to rule alongside Princess Augusta.  The Council of Regency was to act as a brake on the regent's power; some acts of the royal prerogative, such as declarations of war or the signing of peace treaties, would require a majority vote of the council. The provisions of this act actually never came into force, since Prince George had already come of age at the time of the death of his grandfather.

text: Minority of Heir to the Crown Act 1765[edit]

text: In 1760, King George III ascended the throne, with his brother Prince Edward, Duke of York and Albany, as heir presumptive.  However, the new King soon married and had several children.  By 1765, the King had three infant children in the order of succession. Parliament again passed a Regency Act to provide for a regent in the event of the King's death.

text: The Minority of Heir to the Crown Act 1765 (5 Geo. 3 c. 27)[b] provided that either the King's wife, Queen Charlotte, or his mother, Augusta, Dowager Princess of Wales, would act as regent.  This Act also required the formation of a Council of Regency. As with the previous act, the provision of this act actually never came into force, since the eldest son of George III was already 57 when his father died.

text: Regency Bill 1789[edit]

text: The Regency Bill of 1789 was a proposed Act of Parliament to provide that King George III's eldest son George, Prince of Wales, would act as regent due to the King's incapacity through mental illness.  With no legislation already in place, there was no legal basis for providing a regent, and the King was in no fit state to give Royal Assent to the Act.  Parliament decided to have the Lord Chancellor (Lord Thurlow) approve the bill by fixing the Great Seal of the Realm to give Royal Assent.  However, the King recovered in time before the bill could be passed.  Prince Frederick, Duke of York and Albany, and others thought the Act illegal; but following his recovery, the King declared that the government had acted correctly.

text: The King's continuing mental problems throughout the rest of his life confirmed the need for a suitable Regency Act to be in place.  However, the King was hostile to the passing of such an Act while he was of sound mind.

text: Care of King During his Illness, etc. Act 1811[edit]

text: In late 1810, King George III was once again overcome by mental illness, following the death of his youngest daughter, Princess Amelia. Parliament agreed to follow the precedent of 1789: without the King's consent, the Lord Chancellor affixed the Great Seal of the Realm to letters patent naming Lords Commissioners. Such letters patent were irregular, because they did not bear the Royal Sign Manual, and only Letters Patent signed by the Sovereign himself can provide for the appointment of Lords Commissioners or for the granting of Royal Assent. However, because the King was already incapacitated de facto, resolutions by both Houses of Parliament approved the action, directing the Lord Chancellor to prepare the Letters Patent and to affix the Great Seal to them even without the signature of the monarch. The Lords Commissioners thus appointed, in the name of the King, signified the granting of the Royal Assent to a bill which became the Care of King During his Illness, etc. Act 1811 (51 Geo. 3 c. 1). Under this Act, the King was suspended from the personal discharge of the royal functions, and George, Prince of Wales discharged those functions in the name and on behalf of the King from 1811 until 1820, when the King died and the Prince of Wales succeeded to the throne. Parliament restricted some of the powers of the Prince Regent (as the Prince of Wales became known). The constraints expired one year after the passage of the Act. The 1811–1820 period is known as the Regency era.

text: The importance of this Regency Act was that it did not require a Council of Regency, as required by previous legislation. One reason for this was that the Prince Regent was heir apparent to the throne in any case, and would assume full powers upon his father's death.

text: Regency Act 1830[edit]

text: In 1830 the throne passed to George IV's younger brother (George III's third-eldest son), King William IV. But William IV had no legitimate children, and given the age of his wife, Queen Adelaide, he was unlikely to have any in the future. The heir presumptive to the throne was his niece, Princess Alexandrina Victoria of Kent, who was only eleven.

text: As Victoria's father was dead, and Parliament mistrusted the younger sons of George III, the Act (1 Will. 4 c. 2) placed any potential regency caused by the King's death before Victoria had reached 18, in her mother, the Duchess of Kent. However, if Queen Adelaide gave birth to a child, that child was to become king or queen instead of Victoria, and Adelaide would become regent. If such a birth occurred after the King's death, his child was to immediately succeed Victoria, in Victoria's lifetime, as king or queen. The Act prohibited either monarch from marrying during the regency without the Regent's consent, and made it high treason to marry the monarch without such consent, or to assist in or be concerned in the marriage. The Act also prohibited the regent from giving royal assent to a bill to change the line of succession to the throne, or to repeal or alter the Act of Uniformity 1662 or the Scottish Protestant Religion and Presbyterian Church Act 1707.[7]

text: However, since Victoria became queen aged 18, and Queen Adelaide had no more children, a regency was unnecessary and the Act never came into force.

text: Lords Justices Act 1837[edit]

text: In 1837 Princess Victoria of Kent succeeded her uncle to become Queen Victoria.  She became monarch aged 18, while she was still unmarried and without children.  The next in the line of succession was her uncle, the 66-year-old Ernest Augustus, Duke of Cumberland, who succeeded King William IV in the Kingdom of Hanover as Salic Law prevented Victoria becoming Queen of Hanover.  Thus Ernest August departed the United Kingdom to take up his role in Hanover.  This meant that until the Queen married and had legitimate children, the heir presumptive to the throne and his children would reside abroad.  Although they would almost certainly return to the United Kingdom in the event of Victoria dying without an heir, it would take some weeks for this to happen using nineteenth century transport.

text: To provide for the continuation of government in such an instance, Parliament passed the Lords Justices Act 1837 (7 Will. 4. & 1 Vict. c. 72, long title: An Act to provide for the Appointment of Lords Justices in the Case of the next Successor to the Crown being out of the Realm at the Time of the Demise of Her Majesty).  This Act did not provide for a specific regent to be appointed, as it was expected that the new monarch would arrive in the country within a reasonable time.  Thus the Act provided only for Lords Justices, including such people as the Archbishop of Canterbury and the Lord Chief Justice, to take up some of the monarch's duties.  Unlike the powers granted to prospective regents in previous legislation, the powers of the Lords Justice were more limited; for example, they could not dissolve Parliament or create peerages.

text: Regency Act 1840[edit]

text: By 1840, Queen Victoria had married her cousin, HSH Prince Albert of Saxe-Coburg-Gotha and soon gave birth to The Princess Victoria. It was expected that the Queen would have many other children; however, they would be in minority for at least the next 18 years, and Parliament again would have to provide for a regent in the event of Victoria's death. The previous Lords Justices Act 1837 would not apply to the Queen's children, as they resided in the UK. Parliament therefore passed the Regency Act 1840 (3 & 4 Vict. c. 52) which provided for Prince Albert to rule as regent until the eldest child reached the age of 18. The Act did not require a Regency Council to operate alongside Prince Albert, potentially giving him more power than earlier proposed regents. The Act was fairly controversial at the time, as the British people were suspicious of Prince Albert and he was generally unpopular in Parliament. However Victoria lived until 1901 and, in any case, Albert predeceased her, so he did not become regent.

text: The Act would have prohibited the monarch from marrying during the regency without written consent from the Regent and both houses of Parliament, and made it high treason to marry the monarch without such consent, or to assist in or be concerned in the marriage. The Act also prohibited the regent from giving royal assent to a bill to change the line of succession to the throne, or a bill to repeal or alter the Act of Uniformity 1662 or the Scottish Protestant Religion and Presbyterian Church Act 1707.[8]

text: Regency Act 1910[edit]

text: In 1910 Queen Victoria's grandson, King George V, succeeded to the throne. However, his children were all under the age of 18. Therefore, Parliament passed a new Regency Act (10 Edw. 7 & 1 Geo. 5 c. 26) in 1910, that named the King's consort, Queen Mary, as regent. No regency council was provided for, following the Regency Act 1840. Once again, the provisions of this Act never came into operation, as the Prince of Wales was well over 18 by the time George V died.

text: Acts currently in force governing the establishment of a Regency[edit]

text: The Acts currently in force governing the cases in which a Regency shall come into existence and when a Regency shall cease, the determination of who shall be Regent and the powers of such Regent are the Regency Act 1937, the Regency Act 1943, and the Regency Act 1953, jointly referred to as the "Regency Acts 1937 to 1953".

text: Regency Act 1937[edit]

text: In 1936, George VI (George V's second son) had become King, with his elder daughter, Princess Elizabeth, as heir presumptive.  However, Elizabeth was under the age of 18, leading to the need for a new Regency Act.

text: Rather than pass a specific Regency Act relating to the death or incapacity of George VI only, Parliament passed the Regency Act 1937 (1 Edw. 8 & 1 Geo. 6 c. 16), which provided for the incapacity or minority of all future monarchs.  It also repealed the Lords Justices Act 1837, and established in statute the office of Counsellor of State, to be appointed during the monarch's absence abroad, or temporary illness not amounting to complete incapacity.

text: The Act required that the regent should be the next person in the line of succession who was:

text:
over the age of 21,
a British subject domiciled in the United Kingdom, and
capable of succeeding to the Crown under the terms of the Act of Settlement 1701.

text: The Counsellors of State were to consist of:

text:
the consort of the monarch and
the next four people in the line of succession over the age of 21.

text: Thus, at the time of the passing of the Act, Prince Henry, Duke of Gloucester would have become Regent in the event that King George VI died while The Princess Elizabeth was still a minor. The current prospective regent under the Act would be Charles, Prince of Wales.

text: Section 4 of the Act prohibits the regent from giving royal assent to a bill to change the line of succession to the British throne or to repeal or alter the Scottish Protestant Religion and Presbyterian Church Act 1707.

text: Regency Act 1943[edit]

text: This Act (6 & 7 Geo. 6 c. 42) modified the Regency Act 1937 so that counsellors of state who were absent during the Sovereign's absence would not be listed among the appointments. It also declared that the heir-apparent or presumptive to the throne (first in the line of succession) only had to be 18 to be a counsellor.

text: Regency Act 1953[edit]

text: Most of the provisions of the Regency Act 1953 (2 & 3 Eliz. 2 c. 1) ceased to be applicable as children came of age. The sole provision of the 1953 Act that is still relevant is section 2, which removed the perceived anomaly that a person aged 18 could become a counsellor of state and could, upon accession to the throne, personally discharge the royal functions, but could not act as a regent until 21.[c]

text: In 1952 King George VI died and was succeeded by his daughter, Queen Elizabeth II. With her eldest son and heir apparent, Prince Charles, under the age of 18, the Regency Act 1937 would provide for the next person over the age of 21 in the line of succession, the Queen's sister Princess Margaret, to act as regent. However, although a regency was already provided for, Parliament made a new law creating a provision specific to the scenario of the succession to the throne of a son or daughter of Queen Elizabeth II and her husband, Prince Philip, Duke of Edinburgh, while still under the age of 18 years. That provision, which ceased to have any relevance in law once all children of Elizabeth and Philip reached adulthood, was to the effect that Prince Philip, if living, would act as regent in case of an underage succession to the Crown by one of the children born of his marriage to Queen Elizabeth II. Furthermore, if a regency was necessary during Elizabeth II's reign, the Duke of Edinburgh would act as regent if the Queen had no eligible children or grandchildren.

text: The Act also allowed the Queen's mother, Queen Elizabeth the Queen Mother, to become a Counsellor of State again, a position she had lost on the death of her husband King George VI.

text: Situations in which the royal functions are transferred to a Regent[edit]

text: According to the Regency Acts 1937 to 1953, presently in force, there is provision for the establishment of a regency either on account of the minority of the monarch or of the absolute incapacity of the Sovereign to discharge the Royal Functions.

text: Regency in the case of the minority of the Sovereign[edit]

text: According to the Regency Acts in force, if the monarch is under the age of 18 years when he or she succeeds to the Throne, a regency is automatically established, and, until the monarch attains the age of 18 years, the royal functions are discharged by the regent in the name and on behalf of the monarch.

text: In that case, any oaths or declarations required by statute to be taken by the Sovereign on or after succeeding to the Crown are postponed until the sovereign's personal assumption of the royal functions, and for the purpose of all such enactments regarding oaths and declarations that the new monarch must make upon accession "the date on which the Sovereign attains the age of eighteen years shall be deemed to be the date of His Accession".

text: Regency in the case of infirmity of mind or body or of unavailability for a definite cause[edit]

text: Unlike any of the preceding Regency Acts, the Regency Act 1937 (which is still in force) established in law a procedure for determining the incapacity of the Sovereign due to infirmity of mind or body or due to the monarch's unavailability for another definite cause.

text: When a declaration of incapacity is made in accordance with the procedure set out in the Regency Act 1937 a Regency is established and the royal functions are transferred from the Sovereign to a Regent, who discharges them in the name and on behalf of the monarch until a declaration is made in accordance with the said Act to the effect that the monarch's incapacity has ceased.

text: Power to make the declaration of incapacity and the declaration of cessation of incapacity[edit]

text: According to section 2 of the Regency Act 1937, the people who can make a declaration of incapacity (or a declaration that the incapacity has ended) are the consort of the Sovereign, the Lord Chancellor, the Speaker of the House of Commons, the Lord Chief Justice of England and the Master of the Rolls. As of  November 2017[update] these positions were held by, respectively, Prince Philip, Duke of Edinburgh, David Gauke, John Bercow, Lord Burnett of Maldon, and Sir Terrence Etherton.

text: Any declaration of incapacity or of cessation of incapacity needs to be signed by three or more of them. Declarations based on the monarch's unavailability for a definite cause need to be supported by evidence, and declarations attesting the Sovereign's incapacity by reason of infirmity of mind or body need to be supported by evidence including evidence provided by physicians.

text: A declaration of incapacity or of cessation of incapacity needs to be made to the Privy Council and communicated to the governments of the Dominions.

text: Incapacity of the Regent[edit]

text: Under the Regency Act 1937, a declaration of incapacity can also be made with respect to the regent. Thus, if the person serving as regent becomes incapable of discharging the royal functions, either on account of an infirmity of mind or body, or because the regent has become, for a definite cause, unavailable to perform the said functions, the same group of people who can make a declaration of incapacity regarding the sovereign (the wife or husband of the monarch, the Lord Chancellor, the Speaker of the House of Commons, the Lord Chief Justice of England and the Master of the Rolls) are empowered to make a declaration of incapacity regarding the regent.

text: The requirements for that declaration of incapacity are the same ones that are valid with regard to a declaration affecting the sovereign: the incapacity of the regent must be attested by evidence; in the case of infirmity that evidence shall include evidence provided by physicians; the declaration needs to be signed by at least three of the people empowered by law; and it needs to be lodged with the Privy Council.

text: Under section 3, subsection 5, of the Regency Act 1937, when the regent is the object of a declaration of incapacity, he or she ceases to be the regent, as if he or she were dead, and the person next in line capable of discharging the regency becomes regent in his or her place.

text: When a regent is removed from office by a declaration of incapacity and subsequently the incapacity ceases to exist, the regent can be restored to office by means of a declaration of cessation of incapacity. In that case upon the declaration of cessation of incapacity, a change of regent takes place, with the person who has a lower place in the order of succession ceasing to be the regent, and in his or her stead the person with a higher position in the order of succession, who had only ceased to be regent due to the declaration of incapacity, resuming the office of regent. The requirements for declaration of cessation of incapacity regarding the regent are the same ones that are valid for a declaration of cessation of incapacity regarding the sovereign.

text: Assumption of office by the Regent: oaths to be taken before the Privy Council[edit]

text: Whenever a regency is established, either on account of incapacity of the sovereign (duly declared in accordance with the procedure prescribed in statute), or on account of the minority of the Sovereign, and also when there is a change of regent, the new "Regent shall, before he acts in or enters upon his office" take the oaths required by the Regency Act, 1937; accordingly, a new regent only enters into the execution of his office by taking the oaths, and therefore cannot discharge any of the royal functions before taking them.

text: The oaths required to be taken by a new Regent upon his assumption of office are as follows:

text: I swear that I will be faithful and bear true allegiance to [here insert the name of the Sovereign] his heirs and successors according to law. So help me God.

text: I swear that I will truly and faithfully execute the office of Regent, and that I will govern according to law, and will, in all things, to the utmost of my power and ability, consult and maintain the safety, honour, and dignity of [here insert the name of the Sovereign] and the welfare of his people. So help me God.

text: I swear that I will inviolably maintain and preserve in England and in Scotland the Settlement of the true Protestant religion as established by law in England and as established in Scotland by the laws made in Scotland in prosecution of the Claim of Right, and particularly by an Act intituled “An Act for Securing the Protestant Religion and Presbyterian Church Government” and by the Acts passed in the Parliament of both Kingdoms for Union of the two Kingdoms, together with the Government, Worship, Discipline, Rights, and Privileges of the Church of Scotland. So help me God.

text: The said oaths need to be taken and subscribed by the new Regent before the Privy Council, and the Regency Act, 1937 specifies that "the Privy Council are empowered and required to administer those oaths and to enter them in the Council Books".

text: Guardianship of the Sovereign during a Regency[edit]

text: Unlike the situations of minor infirmity or of travel abroad that allow for the possible delegation of the royal functions by the monarch to counsellors of state (as authorised by section 6 of the Regency Act 1937), the establishment of a regency carries with it the notion that the sovereign is not fit and able to administer the affairs of his own person, so that he needs a legal guardian. The guardianship of the monarch, however, is not governed by the same ordinary body of laws that regulate the appointment of legal guardians to people in general. Instead of the legal guardian of the Sovereign being appointed by a court based on the recommendations of the social services, the guardianship of the monarch is provided for directly by Regency Act 1937, presently in force.

text: Because the sovereign in his or her private capacity is not subject to the jurisdiction of the courts, the institution of a regency remains the sole method of placing the person of the sovereign under legal guardianship. And, according to the provisions of the Regency Acts in force, the creation of a regency to discharge the royal functions and the legal guardianship of the monarch go hand in hand: the monarch is only subject to legal guardianship when there is a regency, and always when there is a regency the monarch is placed under legal guardianship.

text: The legal guardianship of the person of the monarch (with the corresponding power to administer the private property of the sovereign) does not necessarily rest with the regent. However, if the none of the prospective guardians provided for in the statute exist, then, also according to the statute, the regent becomes the guardian of the sovereign. Accordingly, during a regency, the regent is the person invested with the royal authority, that discharges the royal functions on behalf of the monarch. The guardian, on the other hand, has the legal custody of the sovereign (who is either a minor or an incapacitated person) and the duty to care for the monarch's personal well being. The two roles may or may not be combined.

text: According to section 5 of the Regency Act 1937,[10] if the monarch is under the age of eighteen years and unmarried, then his or her mother, if living, shall have the guardianship of the monarch's person. On the other hand, if the sovereign is married, but is still under the age of eighteen years, or if the sovereign is a married adult, but has been declared incapable for the time being of performing the royal functions, then the wife or husband of the sovereign, if of full age, shall have the guardianship of the person of the monarch. In all other cases except the two situations described above (that is, if the sovereign is unmarried and under the age of eighteen years, but his mother is no longer living; or if the sovereign is married, but the wife or husband is not of full age; or if the sovereign has been declared incapable of performing the royal functions, but does not have a wife or husband), then the regent shall be the legal guardian of the monarch and shall have custody of his or her person, and the property of the sovereign, except any private property which in accordance with the terms of any trust affecting it is to be administered by some other person, shall be administered by the regent.

text: Current position[edit]

text: Regency[edit]

text: As of  2018[update], under the provisions of the Regency Acts in force, Prince Charles, Prince of Wales, would act as regent in the event of the incapacity of his mother, Queen Elizabeth II. The next person in the line of succession, the Prince of Wales' elder son Prince William, Duke of Cambridge, would also be able to succeed without necessitating a regency and would be eligible to be regent for his grandmother or his father.

text: As of  2018[update], the first person under the age of 18 in the line of succession to the throne is William's son Prince George of Cambridge, who is third in line to the throne after his grandfather and father. If the prince were to succeed to the throne before his 18th birthday on 22 July 2031, his uncle, Prince Harry, Duke of Sussex (the Prince of Wales' younger son), would serve as regent, as George's younger siblings Charlotte and Louis (currently fourth and fifth in line, respectively) would also be minors. In the event that Prince Harry would be unable to serve as regent, the next in line would be his uncle (Prince George's grand-uncle) Prince Andrew, Duke of York, followed by the Duke of York's elder daughter Princess Beatrice of York.

text: Legal guardianship[edit]

text: Currently, if Elizabeth II were to be declared incapable of discharging the royal functions, the legal guardianship of the incapacitated monarch would be vested in her husband Prince Philip, Duke of Edinburgh. If, however, the Duke of Edinburgh were to predecease his wife or be otherwise unable to carry out the duties of legal guardian, the guardianship of the Sovereign would then be vested in the sitting Regent.

text: Prince George of Cambridge, should he ascend to the throne prior to his 18th birthday, is the first person in the present line of succession that would require Regency and Legal Guardianship, until he was 18. According to the Regency Acts as currently in force, should this occur, his legal guardianship would be vested in his mother, Catherine, Duchess of Cambridge. If she were to be unable to carry out the duties of legal guardian, they would then revert to the sitting Regent.


document_title: Tabula rasa

question_text: who said that each of us is born with a tabula rasa

text: Tabula rasa

text: History[edit]

text: Tabula rasa is a Latin phrase often translated as "blank slate" in English and originates from the Roman tabula used for notes, which was blanked by heating the wax and then smoothing it.[1] This roughly equates to the English term "blank slate" (or, more literally, "erased slate") which refers to the emptiness of a slate prior to it being written on with chalk. Both may be renewed repeatedly, by melting the wax of the tablet or by erasing the chalk on the slate.

text: Philosophy[edit]

text: In Western philosophy, the concept of tabula rasa can be traced back to the writings of Aristotle who writes in his treatise "Περί Ψυχῆς" (De Anima or On the Soul) of the "unscribed tablet." In one of the more well-known passages of this treatise he writes that:

text: Haven't we already disposed of the difficulty about interaction involving a common element, when we said that mind is in a sense potentially whatever is thinkable, though actually it is nothing until it has thought? What it thinks must be in it just as characters may be said to be on a writing-tablet on which as yet nothing stands written: this is exactly what happens with mind.[2]

text: This idea was further developed in Ancient Greek philosophy by the Stoic school. Stoic epistemology emphasizes that the mind starts blank, but acquires knowledge as the outside world is impressed upon it.[3] The doxographer Aetius summarizes this view as "When a man is born, the Stoics say, he has the commanding part of his soul like a sheet of paper ready for writing upon."[4] Diogenes Laërtius attributes a similar belief to the Stoic Zeno of Citium when he writes in Lives and Opinions of Eminent Philosophers that:

text: Perception, again, is an impression produced on the mind, its name being appropriately borrowed from impressions on wax made by a seal; and perception they divide into, comprehensible and incomprehensible: Comprehensible, which they call the criterion of facts, and which is produced by a real object, and is, therefore, at the same time conformable to that object; Incomprehensible, which has no relation to any real object, or else, if it has any such relation, does not correspond to it, being but a vague and indistinct representation.[5]

text: In the eleventh century, the theory of tabula rasa was developed more clearly by the Persian philosopher Avicenna  (Ibn Sina in Arabic). He argued that the "...human intellect at birth resembled a tabula rasa, a pure potentiality that is actualized through education and comes to know," and that knowledge is attained through "...empirical familiarity with objects in this world from which one abstracts universal concepts," which develops through a "...syllogistic method of reasoning; observations lead to propositional statements, which when compounded lead to further abstract concepts." He further argued that the intellect itself "...possesses levels of development from the static/material intellect (al-‘aql al-hayulani), that potentiality can acquire knowledge to the active intellect (al-‘aql al-fa‘il), the state of the human intellect at conjunction with the perfect source of knowledge."[6]

text: In the twelfth century, the Andalusian-Islamic philosopher and novelist, Ibn Tufail, known as "Abubacer" or "Ebn Tophail" in the West, demonstrated the theory of tabula rasa as a thought experiment through his Arabic philosophical novel, Hayy ibn Yaqzan, in which he depicted the development of the mind of a feral child "from a tabula rasa to that of an adult, in complete isolation from society" on a desert island, through experience alone. The Latin translation of his philosophical novel, entitled Philosophus Autodidactus, published by Edward Pococke the Younger in 1671, had an influence on John Locke's formulation of tabula rasa in An Essay Concerning Human Understanding.[7]

text: In the thirteenth century, St. Thomas Aquinas brought the Aristotelian and Avicennian notions to the forefront of Christian thought. These notions sharply contrasted with the previously held Platonic notions of the human mind as an entity that preexisted somewhere in the heavens, before being sent down to join a body here on Earth (see Plato's Phaedo and Apology, as well as others). St. Bonaventure (also thirteenth century) was one of the fiercest intellectual opponents of Aquinas, offering some of the strongest arguments toward the Platonic idea of the mind.

text: The writings of Avicenna, Ibn Tufail, and Aquinas on the tabula rasa theory stood unprogressed and untested for several centuries.[citation needed] For example, the late medieval English jurist Sir John Fortescue, in his work In Praise of the Laws of England (Chapter VI), takes for granted the notion of tabula rasa, stressing it as the basis of the need for the education of the young in general, and of young princes specifically. "Therefore, Prince, whilst you are young and your mind is as it were a clean slate, impress on it these things, lest in future it be impressed more pleasurably with images of lesser worth." (His igitur, Princeps, dum Adolescens es, et Anima tua velut Tabula rasa, depinge eam, ne in futurum ipsa Figuris minoris Frugi delectabilius depingatur.)

text: The modern idea of the theory, however, is attributed mostly to John Locke's expression of the idea in Essay Concerning Human Understanding (he uses the term "white paper" in Book II, Chap. I, 2). In Locke's philosophy, tabula rasa was the theory that at birth the (human) mind is a "blank slate" without rules for processing data, and that data is added and rules for processing are formed solely by one's sensory experiences. The notion is central to Lockean empiricism; it serves as the starting point for Locke's subsequent explication (in Book II) of simple ideas and complex ideas. As understood by Locke, tabula rasa meant that the mind of the individual was born blank, and it also emphasized the freedom of individuals to author their own soul. Individuals are free to define the content of their character—but basic identity as a member of the human species cannot be altered. This presumption of a free, self-authored mind combined with an immutable human nature leads to the Lockean doctrine of "natural" rights. Locke's idea of tabula rasa is frequently compared with Thomas Hobbes's viewpoint of human nature, in which humans are endowed with inherent mental content—particularly with selfishness.[citation needed]

text: The eighteenth-century Swiss philosopher Jean-Jacques Rousseau used tabula rasa to support his argument that warfare is an advent of society and agriculture, rather than something that occurs from the human state of nature. Since tabula rasa states that humans are born with a "blank-slate", Rousseau uses this to suggest that humans must learn warfare.

text: Tabula rasa also features in Sigmund Freud's psychoanalysis. Freud depicted personality traits as being formed by family dynamics (see Oedipus complex). Freud's theories imply that humans lack free will, but also that genetic influences on human personality are minimal. In Freudian psychoanalysis, one is largely determined by one's upbringing.[citation needed]

text: The tabula rasa concept became popular in social sciences during the twentieth century. Early ideas of eugenics posited that human intelligence correlated strongly with social class, but these ideas were rejected, and the idea that genes (or simply "blood") determined a person's character became regarded as racist. By the 1970s, scientists such as John Money had come to see gender identity as socially constructed, rather than rooted in genetics.

text: Science[edit]

text: Psychology and neurobiology[edit]

text:
Psychologists and neurobiologists have shown evidence that initially, the entire cerebral cortex is programmed and organized to process sensory input, control motor actions, regulate emotion, and respond reflexively (under predetermined conditions).[8] These programmed mechanisms in the brain subsequently act to learn and refine the ability of the organism.[9][10]
For example, psychologist Steven Pinker showed that—in contrast to written language—the brain is "programmed" to pick up spoken language spontaneously.[11]

text: There have been claims by a minority in psychology and neurobiology, however, that the brain is tabula rasa only for certain behaviours. For instance, with respect to one's ability to acquire both general and special types of knowledge or skills, Howe argued against the existence of innate talent.[12] There also have been neurological investigations into specific learning and memory functions, such as Karl Lashley's study on mass action and serial interaction mechanisms.

text: Important evidence against the tabula rasa model of the mind comes from behavioural genetics, especially twin and adoption studies (see below). These indicate strong genetic influences on personal characteristics such as IQ, alcoholism, gender identity, and other traits.[11] Critically, multivariate studies show that the distinct faculties of the mind, such as memory and reason, fractionate along genetic boundaries. Cultural universals such as emotion and the relative resilience of psychological adaptation to accidental biological changes (for instance the David Reimer case of gender reassignment following an accident) also support basic biological mechanisms in the mind.[13]

text: Social pre-wiring[edit]

text: Twin studies have resulted in important evidence against the tabula rasa model of the mind, specifically, of social behaviour.

text: The social pre-wiring hypothesis refers to the ontogeny of social interaction. Also informally referred to as, "wired to be social." The theory questions whether there is a propensity to socially oriented action already present before birth. Research in the theory concludes that newborns are born into the world with a unique genetic wiring to be social[14].

text: Circumstantial evidence supporting the social pre-wiring hypothesis can be revealed when examining newborns' behaviour. Newborns, not even hours after birth, have been found to display a preparedness for social interaction. This preparedness is expressed in ways such as their imitation of facial gestures. This observed behaviour cannot be contributed to any current form of socialization or social construction. Rather, newborns most likely inherit to some extent social behaviour and identity through genetics[14].

text: Principal evidence of this theory is uncovered by examining twin pregnancies. The main argument is, if there are social behaviours that are inherited and developed before birth, then one should expect twin fetuses to engage in some form of social interaction before they are born. Thus, ten fetuses were analyzed over a period of time using ultrasound techniques. Using kinematic analysis, the results of the experiment were that the twin fetuses would interact with each other for longer periods and more often as the pregnancies went on. Researchers were able to conclude that the performance of movements between the co-twins were not accidental but specifically aimed[14].

text: The social pre-wiring hypothesis was proved correct, "The central advance of this study is the demonstration that 'social actions' are already performed in the second trimester of gestation. Starting from the 14th week of gestation twin fetuses plan and execute movements specifically aimed at the co-twin. These findings force us to predate the emergence of social behaviour: when the context enables it, as in the case of twin fetuses, other-directed actions are not only possible but predominant over self-directed actions."[14].

text: Computer science[edit]

text: In computer science, tabula rasa refers to the development of autonomous agents with a mechanism to reason and plan toward their goal, but no "built-in" knowledge-base of their environment. Thus they truly are a blank slate.

text: In reality autonomous agents possess an initial data-set or knowledge-base, but this cannot be immutable or it would hamper autonomy and heuristic ability.[citation needed] Even if the data-set is empty, it usually may be argued that there is a built-in bias in the reasoning and planning mechanisms.[citation needed] Either intentionally or unintentionally placed there by the human designer, it thus negates the true spirit of tabula rasa.[15]

text: A synthetic (programming) language parser (LR(1), LALR(1) or SLR(1), for example) could be considered a special case of a tabula rasa, as it is designed to accept any of a possibly infinite set of source language programs, within a single programming language, and to output either a good parse of the program, or a good machine language translation of the program, either of which represents a success, or, alternately, a failure, and nothing else. The "initial data-set" is a set of tables which are generally produced mechanically by a parser table generator, usually from a BNF representation of the source language, and represents a "table representation" of that single programming language.


document_title: Capital gains tax in Australia

question_text: when was capital gains tax introduced in australia

question_tokens: when was capital gains tax introduced in australia

text: Capital gains tax in Australia

text: History[edit]

text: A capital gains tax (CGT) was introduced in Australia on 20 September 1985, one of a number of tax reforms by the Hawke/Keating government. The CGT applied only to assets acquired on or after that date, with gains (or losses) on assets owned on that date, called pre-CGT assets, not being subject to a CGT. In calculating the capital gain, the cost of assets held for 1 year or more was indexed by the consumer price index (CPI). This meant the part of a gain due to inflation was not taxed. Indexation was not used if an asset was held for less than 12 months or a sale results in a capital loss. Also, an averaging process was used to calculate the CGT. 20% of a taxpayer's net capital gain was included in income to calculate the taxpayer's average tax rate, and the rate was then applied to all the taxpayer's gross income (i.e., including the capital gain in full). So if a large capital gain were to push a taxpayer into a higher tax bracket in the tax year of sale, the brackets was stretched out, allowing the taxpayer to be taxed at their average tax rate.

text: From 20 September 1999, the Howard Government discontinued indexation of the cost base and (subject to a transitional arrangement) introduced a 50% discount on the capital gain for individual taxpayers. Assets acquired before 21 September 1985 continued to be CGT-free. For assets acquired between 20 September 1985 and 20 September 1999, the taxpayer has an option of using indexation (up to the CPI as at 30 September 1999) or using the discount method. Also from 21 September 1999, small business CGT concessions were introduced (below), reducing tax on small business owners retiring, and on active assets being sold, and allowing a rollover when selling one active asset to buy another. The CGT discount is not available to companies and superannuation funds obtain a CGT discount of one-third.

text: Exemptions[edit]

text: The law is framed so as to apply to all assets, except those specifically exempted. It applies both to assets owned outright and to a partial interest in an asset, and to both tangible and intangible assets. The current exemptions are, in approximate order of significance,

text:
Any asset acquired before 20 September 1985, known as a pre-CGT asset. But an asset loses its pre-CGT status if substantial changes are made to it (e.g. major additions to a building), or on the death of the original owner.
The house, unit, etc., which is the taxpayer's main residence, and up to the first 2 hectares of adjacent land used for domestic purposes. This exemption is generally viewed as being for politically popular reasons, rather than economic reasons (e.g. author and actuary Nicholas Renton takes that view)[citation needed].
Personal use assets, acquired for up to $10,000. This includes boats, furniture, electrical equipment, etc., which are for personal use. Items normally sold as a set must be treated together for the $10,000 limit.
Capital loss made from a personal use asset (s108-20(1)ITAA1997…any capital loss you make from a personal use asset is disregarded)
Collectables acquired for up to $500. This includes art, jewellery, stamps, etc., held for personal enjoyment. Items normally sold as a set must be treated as a set for the $500 limit. If collectables sometimes rise in value then this exemption can be an advantage to a taxpayer collecting small items.
Cars and other small motor vehicles such as motorcycles ("small" being a carrying capacity less than 1 tonne and less than 9 passengers). Since cars normally decline in value this exemption is actually a disadvantage. But the exemption applies even to antique or collectible vehicles, if they rise in value then the exemption is an advantage.
Compensation for an occupational injury, or for personal injury or illness of oneself or a relative. (But compensation for breach of contract is subject to CGT.)
Life insurance policies surrendered or sold by the original holder. Such gains are instead taxed as ordinary income (when held for less than 10 years). A third party who buys such a policy will be subject to CGT as on an ordinary investment though.
Winnings or losses from gambling (which are free of income tax too).
Bonds and notes sold at a discount (including zero-coupon bonds) and "traditional securities" (certain interest bearing notes convertible to shares). Gains and losses from these come under ordinary income tax.
Medals and decorations for bravery and valour, provided they're acquired for no (financial) cost.
Shares in a pooled development fund. A pooled development fund is a special structure with rules facilitating venture financing. Certain other eligible venture capital investments are exempt from CGT too.
Payments under particular designated government schemes, for example various industry restructuring schemes.

text: Trading stock is not regarded as an asset and instead comes under ordinary income tax. Items of plant being depreciated are subject to CGT, but only in the unusual case that they're sold for more than original cost (see Depreciating assets below)

text: Operation[edit]

text: The capital gains tax law is expressed in terms of a set of 52 CGT events (see ITAA 1997 section 104-5). Each event specifies results such as gain, loss, or cost base adjustment are to be made, and how to determine the date to use for the transaction.

text: The most common event is A1, the disposal of an asset. On disposal a capital gain arises if the proceeds are greater than the cost base, a capital loss arises if less than the reduced cost base. The date to be used is the date of the contract of sale (even if payment is not until later), or if no such contract exists then the date the taxpayer stopped being the owner (e.g. if an asset is lost).

text: The cost base of an asset is the amount paid for it, including associated costs such as agent's commissions. But there are three forms, from lowest to highest amount,

text:
Reduced cost base. This is the cost base, but with certain costs excluded, or certain extra reductions applied.
Cost base. Being money paid, and associated expenses of the transaction, plus later capital costs of additions, or defending one's ownership.
Indexed cost base. The elements of the cost base each indexed by changes in the consumer price index. Each element is indexed according to the date the cost was incurred. This is relevant only for assets acquired before 21 September 1999.

text: On disposal then,

text:
If the proceeds are below the reduced cost base, the difference is a capital loss.
If the proceeds are above the plain cost base, the difference is the capital gain.
If the proceeds are in between the reduced cost base and plain cost base there's neither a gain nor loss. (Quite often the reduced cost base is the same as the plain cost base and this does not arise.)

text: Capital gains and losses in a given tax year are totalled, but in three separate categories according to the class of the asset,

text:
Collectibles (those above the $500 exemption described above).
Personal use items (those above the $10,000 exemption described above).
All other assets.

text: The existence of separate categories for collectibles and personal items works to prevent losses from them being offset against other gains such as from investments. In effect it prevents hobbies being subsidised.

text: Net losses in each category can be carried forward to future years, in their respective categories, but cannot be offset against ordinary income, or each other.

text: Capital losses are applied before the capital gains discount:

text: Reduced cost base[edit]

text: When a CGT event takes place on a CGT asset and the cost base is greater than the capital proceeds, then the taxpayer needs to calculate the asset's reduced cost base to work out whether there was a capital loss. The reduced cost base of a CGT asset has the same five elements as the cost base, except for the third element.[1]

text: Common example of reduced cost base:

text: Prior to 1 July 2001, distributions from property trusts commonly included a so-called "tax free" portion which was subtracted from the reduced cost base but not the cost base, in a similar way. (See Property trust distributions below.)

text: Indexed cost base method[edit]

text: For assets acquired between 20 September 1985 and 20 September 1999 the taxpayer may choose between two methods of calculating a capital gain – the discount method described above, or the indexation method – whichever method results in the least tax. The indexation method is as follows:

text:
For each qualifying asset, calculate the capital gain: the difference between proceeds of sale of the asset and its indexed cost base, but with indexation stopped at the CPI as of the quarter ending 30 September 1999.
Capital losses are applied in the usual manner: capital losses (of the same or previous years) reduce the capital gain. If there is a net capital gain, it is included in taxable income and if negative the capital loss is carried forward to the next year.

text: For example: Individual purchased shares in 1987. The Indexed capital gain is $5,000 or Gross Discounted capital gain is $7,500. The capital losses are $4,000:

text:
$5,000 Indexed Gain Outcome: Losses of $4,000 applied = $1,000 net capital gain
$7,500 Discounted Gain Outcome: Losses of $4,000 applied gives a balance of $3,500, which multiplied by 50% discount = $1,750 net capital gain

tag: ol

text: With only capital gains - the discount method is usually better (note indexation is better for small (perhaps only very small) gains). The choice is essentially between reducing the capital gain by the CPI rise of the cost base, or halving it outright. CPI indexation may be small, but if the proceeds are below it then there's no CGT. When the gain is above twice the indexation result, then the discount method is better.

text: Specific assets[edit]

text: The following are matters relating to specific asset classes.

text: Gifts[edit]

text: A gift made by a living person is treated as a disposal at current market value. The giver is taxed for a disposal at that price, the receiver gets that as their cost base. (s112-20(1) ITAA 1997)

text: Testamentary gifts, i.e. made upon death under a will or under the laws of intestacy, are instead subject to rollover provisions in most cases (see Death below).

text: Part paid shares[edit]

text: When a shareholder is called to pay a further installment on part-paid shares, the amount paid is added to the cost base and reduced cost base. The date of acquisition of the shares remains unchanged.

text: Splits[edit]

text: When a company splits its shares, for instance 2 shares for every 1 previously held there is no immediate CGT effect. The taxpayer's date of acquisition and cost base for the holding are unchanged, only it is for the new number of shares. Likewise for a consolidation (reverse split).

text: Bonus issues[edit]

text: Bonus shares issued by a company from its share capital account are treated the same as splits (above), they only change the number of shares in the holding. However, there are complicated rules to apply when bonus shares are offered in lieu of dividends, or when they're part-paid shares.

text: Bonus units from a unit trust are similar to bonus shares. Fully paid units with no amount to include in one's accessible income (as advised by the trust), merely change the number of shares in one's holding, otherwise a set of rules apply.

text: Dividend reinvestment[edit]

text: Some companies offer dividend reinvestment plans allowing a shareholder to elect to receive newly issued shares instead of a cash dividend, often at a small discount to the prevailing market price.

text: Such a plan is treated as if the shareholder received the dividend and then used the money to buy shares. The dividend is taxed like any other dividend (including with any dividend imputation), and the shares are taken to be acquired for the cash the shareholder did not receive.

text: The investor would need to keep a record of each parcel of shares received under a dividend reinvestment plan, including issue dates and amounts of dividend applied towards those shares.

text: Identification of shares[edit]

text: When different parcels of shares (etc.) have been acquired at different times or for different prices, it is necessary to identify which ones are disposed of in a sale, since the capital gain or loss may be different for each.

text: If share certificates or similar are used then clearly the ones transferred are the parcel. But when shares are held aggregated in bank account style such as in the CHESS system used by the Australian Securities Exchange, then the taxpayer can nominate which of the original purchases it is that are sold.

text: In both cases the taxpayer can choose to their advantage, such as selling a parcel with a capital loss to realise that immediately, or keeping particular parcels until they reach 1 year old to get the 50% discount on gains.

text: A further option is available for parcels of the same shares acquired all on one day. If desired they can be aggregated to make one parcel with the total of the costs, i.e. averaging out the prices paid. This reduces paperwork if for example shares are bought at a range of prices through the course of a day.

text: Stapled shares[edit]

text: Some listed companies are set up so that their securities are "stapled" together. For example, each unit of the Westfield Group is three parts, a share in Westfield Limited, a unit in the Westfield Australia Trust, and a unit in the Westfield America Trust.

text: Taxpayers treat each part of a stapled security separately for capital gains tax purposes, i.e. calculate a gain or loss on each separately. But since stapled securities trade with only a price for the bundle, the taxpayer must use some "reasonable" method for apportioning the price across the parts. The Westfield Group for example recommends on their securities using the ratios of the net tangible asset backing (NTA) of each part.

text: Building allowances[edit]

text: A building allowance of 2.5% (or 4% in certain cases) of the original construction cost of a building is allowed as a deduction against income each year (until the original cost is exhausted). The amounts claimed as a deduction are subtracted from the cost base and reduced cost base of the building. (Note the allowance is calculated on the original construction cost, not a price later paid, and note also a building is a separate CGT asset from the land it stands on, and only the building cost base is affected.)

text: Building allowance works as a kind of depreciation, representing progressive decline over the lifetime of a building. But unlike the way depreciation has a final balancing adjustment against income, the building allowance instead gets that as capital gain (or loss) through it lowering the cost base.

text: As an example, if it is assuming a building is worth nothing at the end of the 40 years implied by the 2.5% a year allowance, the owner has had deductions progressively over those years instead of only realising the whole lot in one big capital loss at the end.

text: Property trust distributions[edit]

text: Distributions from property trusts (both listed and unlisted) commonly include two amounts which affect capital gains tax,

text:
"Tax deferred" portion of the distribution.
Capital gains distributed, some under the discount method, some under the indexation method.

text: The investor subtracts the tax deferred part of a distribution from their cost base (and reduced cost base). It is called tax deferred because the investor pays no tax on the amount immediately, but will pay capital gains tax on it when they later sell the units, because it has lowered their cost basis.

text: Tax deferred amounts generally arise from building allowances, the same as for direct property ownership (see above). At its simplest it works as follows. Suppose a trust earns rental income of $100 and has building allowance deductions of $20. Then the net taxable income is $80 and that amount is distributed to unitholders to be included in their income. The remaining $20 of cash is distributed to the unitholders too, but it is regarded as a return of capital.

text: An investor's cost base cannot go below zero. If tax deferred amounts have reduced it to zero, then any excess must be declared as a capital gain in the year received. This is an unusual situation, generally it can not occur unless an investor has been able to get trust units for much less than the value of the buildings.

text: Capital gains distributed by a trust arise from the trust selling assets. They're taxed in the investor's hands the same as other gains. When there's a choice of discount or indexation method, the trust manager makes that choice.

text: Discount capital gains are distributed in already discounted form, i.e. already reduced by 50% for assets held at least 1 year. The investor must gross it up by doubling, apply any capital losses, then re-discount the remainder. (If one has no capital losses to apply then there's no change and the amount received is the amount taxed.)

text: Options[edit]

text: For the option holder, i.e. the taker,

text:
An option which is bought and then sold is subject to CGT like any other asset. If it expires instead of being sold then it is taken to have been disposed of at expiry for nil proceeds.
When a call option is exercised, the shares (or other assets) acquired have a cost base which is the option premium paid plus the amount paid to exercise. The acquisition date of the shares is the date you exercise the rights or options to acquire the shares.[2]
When a put option is exercised, the proceeds for shares sold are the amount received in the exercise, less the option premium previously paid.

text: For the option writer, i.e. grantor,

text:
When an option is written, the premium received by the writer is an immediate capital gain. (This is the same as when selling other newly created intangible assets.)
When a call option is exercised, the writer sells shares to the option holder. The capital gain from writing the option is reversed and the proceeds for the shares sold are the exercise price received plus the option premium received.
When a put option is exercised, the writer buys shares from the option holder. The capital gain from writing the option is reversed and the cost base for the shares is the exercise price paid less the option premium received.

text: Share rights[edit]

text: Rights or options issued by the company allowing existing shareholders to buy new shares are treated as being acquired for nil cost at the same time as the shares were acquired. If sold then the proceeds are a capital gain (or not a capital gain if those shares were pre-CGT).

text: If the rights are exercised then the new shares are taken to be acquired for the amount paid and on the date exercised. If the shares were pre-CGT then the market value of the rights at the time of exercise must be added to the cost base of the new shares too.

text: Company issued rights or options bought from someone else (i.e. not issued direct from the company) are treated like options above.

text: Demutualisation[edit]

text: When a mutual society such as an insurance company demutualises by converting memberships to shareholdings, the company advises members of a cost base and reduced cost base for their new shares. That cost base represents "embedded value". The ATO publishes cost bases for significant recent demutualisations, such as AMP Limited and Insurance Australia Group. When shares are later sold a capital gain or loss occurs in the usual way.

text: Worthless shares[edit]

text: When a company is being wound up or goes into administration, the liquidator, receiver or administrator may make a formal declaration that they expect no residual distribution to shareholders (all money being exhausted paying creditors first). Shareholders may then, if they wish, claim a capital loss on the shares as if they disposed of them for nil consideration. If a subsequent liquidation distribution does occur then it is treated as a capital gain.

text: Liquidators were granted the power to make such declarations from 11 November 1991, and other insolvency practitioners from 11 May 1991. Of course a shareholder may always sell apparently worthless shares to a third party for a nominal sum to realise a loss.

text: Short selling[edit]

text: Short selling is covered under ordinary income tax, not capital gains tax. The reason for this is that in the first leg, i.e. the sale, the investor is not disposing of an asset they own.

text: Depreciating assets[edit]

text: When deductions are claimed for depreciation of an asset, and it is later sold, there a balancing adjustment to be made for the proceeds versus the written-down value. In the usual case that the proceeds are less than the original cost, then any difference between proceeds and written-down value is income or further deduction and CGT does not apply.

text: If however, the proceeds are greater than the original cost, then the amount between the written-down value and the original cost is income, and the proceeds above that are a capital gain. Effectively deductions allowed in past years are reversed then the usual CGT applies.

text: Share traders[edit]

text: A person for whom buying and selling shares or other assets is a business treats those assets as trading stock, and gains or losses on them are ordinary income rather than capital gains. The taxpayer needs to determine whether they fall into the category of a share trader or not.

text: There's no specific law on share traders, but the ATO publishes a fact sheet with guidelines based on court rulings [1]. It includes examples of definitely trading, and definitely not. Factors include whether the intention is to profit, the repetition and regularity of the activity, and whether organised in a businesslike manner. (At worst a taxpayer can use the system of private rulings to get an ATO determination on particular circumstances they're in or are contemplating.)

text: A trader has the advantage that losses can be offset against other income (dividends for instance), and has a choice of valuing each share at either cost price or market price each year, so unrealised losses can be booked immediately but unrealised gains held back. The disadvantage for a trader is that the 50% discount on CGT gains for assets held 1 year or more is not available.

text: Prior to the introduction of capital gains tax in 1985, section 52 of the ITAA 1936 required taxpayers to declare (on their next return) assets they had acquired for trading. This was known as declaring oneself a share trader, but now there's no such election.

text: Rollovers[edit]

text: The following sections are various special provisions for deferring capital gains tax liability, either by letting a new owner keep the previous owner's cost base, or by letting an owner switch to a new similar asset and keep the old cost base.

text: Death[edit]

text: On death, CGT assets transferred to beneficiaries (either directly or first to an executor) are not treated as disposed of by the deceased, but instead the beneficiaries are taken to have acquired them at the deceased's date of death and with cost base and reduced cost base as at that date.

text: This rollover does not apply if the beneficiary is not an Australian resident, or is a tax-advantaged entity such as a superannuation fund. In such cases the deceased is taken to have sold to the beneficiary at market value at the date of death, and the usual capital gains tax applies. Churches and charities are regarded as tax-advantaged too, but bequests to registered "Deductible Gift Recipients" are not taxed. Gifts under the Cultural Bequests Program are not subject to tax either.

text: Also, this rollover does not apply to pre-CGT assets (i.e. acquired by the deceased before 20 September 1985), in that case assets are taken to be disposed of at market value to the beneficiary, at the deceased's date of death. Being pre-CGT, there is no capital gains tax to the estate, but the pre-CGT status of the asset is lost.

text: Notice that for both pre and post CGT assets there are no tax liabilities to the deceased's estate for the usual case of transferring to an individual Australian beneficiary. This means in the majority of cases capital gains tax does not operate as a proxy for death duties or estate tax.

text: Unused net capital losses carried forward by the deceased from past tax years are lost with their death. These losses cannot be recouped by the estate or the beneficiaries (TD 95/47).

text: Marriage breakdown[edit]

text: When assets are transferred between spouses under a court-approved settlement following marriage breakdown, certain rollover provisions automatically apply. Essentially the spouse receiving the asset keeps the original cost base and acquisition date. Newly created intangible assets like rights or options have a cost base of only what was actually spent in creating them (solicitor's fees for instance).

text: Transfers not made under court approval are not subject to rollover, the normal CGT rules apply to any disposals. And if assets are not transferred at market value and not in an "arms length" transaction then for CGT purposes the transfer will be treated as having been made at market value.

text: Takeovers[edit]

text: "Scrip for scrip" rollover may be available for a takeover or merger where a shareholder receives new shares or new trust units rather than cash. When rollover is available the new shareholding is treated as a continuation of the old, with the same cost base and date of acquisition. Scrip for scrip rollover is available when,

text:
The original shares are CGT assets. Rollover is not available on pre-CGT shares.
The value of the bid is high enough that a capital gain would arise if treated as a disposal of the original shares. Rollover does not apply to a capital loss that must be realised instead.
The swap is shares for shares, or trust units for trust units. It does not apply to a change of structure.
The takeover occurs on or after 10 December 1999, the introduction of this rollover provision.
The bidder has made its bid available to all voting shareholders, and becomes the owner of 80% of the voting shares. This works to restrict rollover to genuine takeovers.
Certain other anti-tax-avoidance rules are not triggered. These apply to a target company or trust with just a small number of shareholders or where there's a significant common stakeholder.

text: The shareholder can elect not to utilise scrip for scrip rollover, and instead treat it as a disposal of their original holding for the value of the new shares, realising a capital gain. Or the shareholder can choose rollover on just a portion of their holding.

text: Under Australian companies' law, if a bidder gains 90% acceptance it may force remaining holders to take the bid. Such holders are in the same position as those who voluntarily accepted (in particular note that the "compulsory acquisition" rollover below does not apply).

text: Demergers[edit]

text: When a company spins off part of its business as a new separate company and gives shareholders new shares in that new company, the taxpayer's cost base of the original shares is split between the original and the new holding. The company advises the appropriate proportions and the shareholder would allocate the original cost base between the two entities. The new holding is taken to be acquired at the date of demerger. The cost base of the original shareholding is reduced by the cost base of the new shareholding.

text: In certain eligible demergers rollover relief may be available, the company will generally advise of that. If available and if the taxpayer elects to use it, the new holding is taken to have been acquired at the same date as the original holding, and that includes being pre-CGT if the original was pre-CGT.

text: Usually rollover relief (when available) is an advantage, it preserves pre-CGT status and helps an individual meet the 1 year time period for the 50% discount on gains. However, on pre-CGT assets where the market value of the new holding is below its cost base, the taxpayer is better off not using the rollover but instead let the new holding be a CGT asset so the capital loss there can be utilised.

text: Destruction or compulsory acquisition[edit]

text: When an asset is compulsorily acquired by a government agency, or is destroyed and insurance or compensation is received, the taxpayer may choose between,

text:
Regarding it as a sale at that price.
Rollover whereby the compensation is used to replace or repair the asset and it is considered a continuation of the original. The original date of acquisition is not changed, in particular a pre-CGT asset continues to be pre-CGT.

text: When rolling-over, there are rules to use when the compensation differs from the replacement or repair cost. And in particular there's a limit of 120% of market value if replacing a pre-CGT asset (so it is not possible to get a substantially bigger asset into pre-CGT status).

text: Note that these provisions apply only to capital assets, not to trading stock, nor to plant being depreciated.

text: Small business[edit]

text: Changes have been made by ATO to relax some of the provisions listed below. Check ATO Website for further details.

text: Four capital gains tax concessions for small businesses presently exist, introduced 21 September 1999.

text:
15-year exemption. Exemption from CGT for an owner who had a small business for 15 years and is selling due to retirement (must be over 55 years old) or due to permanent incapacitation.
50% active asset reduction. Capital gains are reduced by 50% for assets actively used in the business (including intangibles). The normal 50% discount rule for assets held at least 1 year applies too, in that case it is 50% off then 50% off the remainder, for an overall 75% discount.
Small business retirement exemption. When selling a small business and not over 55, CGT is not payable on net capital gains paid into a superannuation fund. There's a lifetime limit of $500,000 on this exemption.
Small business rollover. The net capital gain resulting from the sale of an active asset can be reduced by the amount spent on a nominated replacement asset. This is only a deferral of the gain, it is crystallised if the replacement is sold or its use changes (but a new further rollover can then be made if desired).

text: There are rules to apply for what constitutes a small business. The key elements are:

text:
Up to $6,000,000 net assets. "Related entities" are counted against this limit too.
One "controlling individual" having 50% or more voting plus 50% or more economic interest. Or two such individuals if they own half each. But notice three individuals with equal stakes would fail the test, because none of them is in a controlling position.

text: The exemption for gains paid into a superannuation fund is similar to what employees may do with an eligible termination payment (accumulated unused long service leave, etc.) on leaving a job. But the small business case it is only the net gain after applying the CGT discounts which needs to be paid into the fund to escape CGT liability, the remainder can be kept in cash.


document_title: At sixes and sevens

question_text: where does 6's and 7's come from

question_tokens: where does 6 's and 7 's come from

text: At sixes and sevens

text: Origin and early history[edit]

text: An ancient dispute between the Merchant Taylors and Skinners livery companies is the probable origin of the phrase.[1] The two trade associations, both founded in the same year (1327[2]), argued over sixth place in the order of precedence. In 1484, after more than a century and a half of bickering, the Lord Mayor of London Sir Robert Billesden ruled that at the feast of Corpus Christi, the companies would swap between sixth and seventh place and feast in each other's halls. Nowadays, they alternate in precedence on an annual basis.[1][2]

text: A similar phrase, "to set the world on six and seven", is used by Geoffrey Chaucer in his Troilus and Criseyde. It dates from the mid-1380s and seems from its context to mean "to hazard the world" or "to risk one's life".[3] William Shakespeare uses a similar phrase in Richard II, "But time will not permit: all is uneven, And every thing is left at six and seven".

text: The phrase is also used in Gilbert & Sullivan's comic opera H.M.S. Pinafore (1878), where Captain Corcoran, the ship's Commander, is confused as to what choices to make in his life, and exclaims in the opening song of Act II, "Fair moon, to thee I sing, bright regent of the heavens, say, why is everything either at sixes or at sevens?"

text: The phrase took on additional meaning during the early 1960s, when debate over Britain's position in Europe under Harold Macmillan centred on membership of the EEC 'Six' or the EFTA 'Seven' smaller independent states.

text: The phrase appears in a few songs, including "Don't Cry for Me Argentina" from the musical Evita, "Raoul and the Kings of Spain" from Tears for Fears, and "Playing With Fire" by Stereo MCs. The eleventh studio album from Strange Music front man Tech N9ne was entitled "All 6's and 7's". The song "Sixes and Sevens" was co written and sung by Robert Plant. It also appears in the Rolling Stones' song "Tumbling Dice". There is an album by Norwegian gothic metal band Sirenia called At Sixes and Sevens(including a song with the same name) where this phrase is used in several songs.

text: The phrase is also used in the 1978 movie The Wiz, when Miss One gives Dorothy the silver slippers and comments, "Oh, don't be all sixes and sevens, honey" to Dorothy as Dorothy is in a state of confusion after killing the Wicked Witch of the East. It is also found in the 1993 film The Remains of the Day. It is also mentioned in the 2002 film Goldmember by Mike Myers' character Austin Powers to his dad, who at the time were speaking "English English": "oh, the one who was all sixes and sevens?" During the second episode of season five of the HBO series Six Feet Under, George uses the phrase to describe his wife's attitude towards him.

text: We also come across the phrase in Sabina's opening monologue from Thornton Wilder's 1942 Pulitzer Prize winning play The Skin of Our Teeth: "The whole world's at sixes and sevens, and why the house hasn't fallen down about our ears long ago is a miracle to me."

text: Similar phrases[edit]

text:
The phrase bears comparison with the Chinese phrase luan qi ba zao (乱七八糟/亂七八糟, literally "chaos seven eight rotten"), which means messy (which could refer to a messy situation—implying problems, which in turn could possibly include hazard, but hazard is not a necessary element to the Chinese phrase. The phrase could also be literally used to mean a physical mess) but instead uses the numbers seven and eight.[4]
Also, it can be compared with the Chilean phrase al tres y al cuatro, with a similar meaning, but using the numbers three and four.
In Arabic, the phrase يضرب أخماساً لأسداس (He shows fifths for sixths) is said of a devious person who says one thing but means another, (تاج العروس), which would naturally lead to a state of confusion and of being "at sixes and sevens".
A similar expression is used also in Persian where they say شش پنج ("He says five but he means six").
In the related Maltese language, the phrase sitta u sitta, tnax (six and six make twelve) exists, which is an ironic phrase used to describe someone who is aloof and has no idea what is going on.
In Russian, the phrase "семь, восемь" (literally, "seven (or) eight") means[citation needed] that something isn't done very well or precisely, so it measures "either seven or eight".