No capital gains tax for properties in natural disaster land swap programs

On 14 December 2013, the Assistant Treasurer announced that this measure will not proceed.

As originally announced by the previous government, any property owners with investment properties involved in the Lockyer Valley Regional Council's land swap program were to be eligible for capital gains tax (CGT) relief.

This measure would have allowed taxpayers to choose a CGT exemption when they participated in an Australian Government agency program that provided replacement assets to taxpayers affected by a natural disaster, like the one run by Lockyer Valley Regional Council.

Taxpayers would also have been able to attain pre-CGT status on their replacement asset so they were not disadvantaged in tax terms if they participated in this type of program.

A CGT exemption would have also applied to rights arising under a cash grant program for taxpayers affected by a natural disaster (whether the program is run by an Australian Government agency or another entity).

Taxpayers whose main residence was accidentally destroyed would have been able to access the main residence exemption to the extent they would have been able to had their main residence not been destroyed. The exemption would have applied where they chose to rebuild the dwelling and then sell the land or dwelling or both without establishing the new dwelling (and its adjacent land) as their main residence. This would have applied to all accidental destructions regardless of whether the destruction resulted from a natural disaster.

This measure was generally to have applied to CGT events happening on or after 1 July 2011.

Administrative treatment

The ATO will accept tax returns as lodged during the period up until the day the protection measure was passed by Parliament. The protection became law on 30 June 2014.

Assessments now need to be reviewed to determine whether legislative protection is available or amendments to assessments are required.

Protection for taxpayers

In relation to the measures in the 2011-12 Budget that will not be proceeding, parliament has enacted legislation to provide protection for taxpayers who under-assessed their tax position on the basis of announced changes that will no longer proceed. Taxpayers who paid additional tax by following announced changes that will no longer proceed will be entitled to a refund.

Information on how the protection works and which previous announcements are protected is available at Protection for anticipation of certain discontinued announcements.

Find out more

Information refer to the following:

Protection for anticipation of certain discontinued announcements

Tax and Superannuation Laws Amendment (2014 Measures No.2) Act 2014External Link

Proposal paper - Minor amendments to the capital gains tax law External Link (PDF 164 KB) page 8 was released on 27th June 2012

Discussion paper - Capital gains tax relief for taxpayers affected by natural disastersExternal Link providing further detail on these changes was issued 9 October 2011.

Media release no. 137External Link issued by the Assistant Treasury and Minister for Financial Services and Superannuation on 9 October 2011.

    Last modified: 16 Oct 2015QC 25101