Treasury Laws Amendment (2021 Measures No. 4) Act 2021 (72 of 2021)

Schedule 3   Exempting granny flat arrangements from CGT

Income Tax Assessment Act 1997

1   After Division 134

Insert:

Division 137 - Granny flat arrangements

Table of Subdivisions

137-A - When CGT events do not happen

Subdivision 137-A - When CGT events do not happen

Guide to Subdivision 137-A

137-1 What this Subdivision is about

A CGT event does not happen when certain granny flat arrangements are entered into, varied or terminated.

Table of sections

Operative provisions

137-10 Meaning of key terms

137-15 CGT event does not happen when a certain kind of granny flat arrangement is entered into

137-20 CGT event does not happen when a certain kind of granny flat arrangement is varied

137-25 CGT event does not happen when a certain kind of granny flat arrangement is terminated

Operative provisions

137-10 Meaning of key terms

(1) An individual holds a granny flat interest in a *dwelling under an *arrangement if the individual has a right to occupy the dwelling for life that has been conferred by the arrangement.

(2) An individual is eligible for a granny flat interest at a particular time if:

(a) the individual reached *pension age at or before that time; or

(b) the individual:

(i) needs, because of a disability, assistance to carry out most day-to-day activities; and

(ii) is likely to continue to need that assistance, because of that disability, for at least 12 months after that time.

(3) This Subdivision applies:

(a) to a *dwelling's *adjacent land in a corresponding way to the way Subdivision 118-B applies to the adjacent land; or

(b) to an *adjacent structure of a flat or home unit in a corresponding way to the way Subdivision 118-B applies to the adjacent structure.

Note: Subsections 118-120(1) and (5) provide that Subdivision 118-B (about main residences) applies to adjacent land and adjacent structures as if they were a dwelling.

137-15 CGT event does not happen when a certain kind of granny flat arrangement is entered into

A *CGT event does not happen, to the extent it relates to creating a *granny flat interest in a *dwelling under an *arrangement by entering into the arrangement at a particular time (the start time ), if:

(a) the individual who holds, or who is to hold, the granny flat interest under the arrangement is *eligible for a granny flat interest at the start time; and

(b) another individual:

(i) holds an *ownership interest in the dwelling at the start time; or

(ii) agrees, under the arrangement, to *acquire an ownership interest in a dwelling that is to be the dwelling in which the first-mentioned individual is to hold the granny flat interest; and

(c) at the start time, both individuals are parties to the arrangement; and

(d) the arrangement:

(i) is in writing; and

(ii) indicates an intention for the parties to the arrangement to be legally bound by it; and

(e) the arrangement is not of a commercial nature.

137-20 CGT event does not happen when a certain kind of granny flat arrangement is varied

A *CGT event does not happen, to the extent it relates to creating or varying a *granny flat interest in a *dwelling under an *arrangement by varying the arrangement at a particular time (the variation time ), if:

(a) the individual who holds, or who is to hold, the granny flat interest under the arrangement (as varied) is *eligible for a granny flat interest at the variation time; and

(b) another individual:

(i) holds an *ownership interest in the dwelling at the variation time; or

(ii) agrees, under the arrangement (as varied), to *acquire an ownership interest in a dwelling that is to be the dwelling in which the first-mentioned individual is to hold the granny flat interest; and

(c) at the variation time, both individuals are parties to the arrangement (as varied); and

(d) the arrangement (as varied):

(i) is in writing; and

(ii) indicates an intention for the parties to the arrangement to be legally bound by it; and

(e) the arrangement (as varied) is not of a commercial nature.

137-25 CGT event does not happen when a certain kind of granny flat arrangement is terminated

A *CGT event does not happen, to the extent that it relates to terminating a *granny flat interest in a *dwelling under an *arrangement by terminating the arrangement, if:

(a) section 137-15 applied so that a CGT event did not happen when the arrangement was entered into; or

(b) section 137-20 applied so that a CGT event did not happen when the arrangement was varied.