Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 102 - Assessable income includes net capital gain  

Operative provisions  

SECTION 102-6   Meanings of the different categories of capital gains  
Non-residential capital gains

102-6(1)    
If a * capital gain you make during an income year is not one to which subsection (5) applies, then so much of the capital gain as is not a * residential capital gain is a non-residential capital gain .

Residential capital gains

102-6(2)    
If a * capital gain you make during an income year:

(a)    is not one to which subsection (5) applies; and

(b)    arises from a * CGT event happening in relation to a * CGT asset that is or was a * residential dwelling;

then so much of the capital gain as is worked out as follows is a residential capital gain :

Amount of the * capital gain

×

Residential accommodation days Days in the post-July 2027 ownership period

where:

post-July 2027 ownership period
means the number of days in so much of the following period:

(a) unless paragraph (b) applies - your * ownership period of the * CGT asset;

(b) if because of section 115-215 you are taken to have made the * capital gain as a beneficiary of a trust - the trustee ' s ownership period of the CGT asset;

as:

(c) is on or after 1 July 2027, and as ends on the day the * CGT event happens; and

(d) does not include a day or part of a day for which you can reasonably expect to disregard the capital gain because of Subdivision 118-B (about the main residence exemption).

Note 1:

If the CGT event is a realisation event mentioned in paragraph 112-155(1)(c) or 112-165(1)(c) , subsection (4) of this section applies to your capital gain for the portion of your ownership period that is before 1 July 2027.

Note 2:

If the CGT event happens (on or after 1 July 2027) in relation to a CGT asset that was a pre-CGT asset just before 1 July 2027, your capital gain for the portion of your ownership period that is before 1 July 2027 is disregarded (see subsection 112-175(2) ).

residential accommodation days
means the sum of:

(a) the number of days in the post-July 2027 ownership period in which the * CGT asset is used, or held, solely for the provision of residential accommodation; and

(b) for each other day in the post-July 2027 ownership period - the fraction of that day that represents the extent to which, on that day, the CGT asset is used, or held, for the provision of residential accommodation.

Deferred non-residential capital gains

102-6(3)    
If a * capital gain you make during an income year is one to which subsection (5) applies, then so much of the capital gain as is not a * deferred residential capital gain is a deferred non-residential capital gain .

Deferred residential capital gains

102-6(4)    
If a * capital gain you make during an income year:

(a)    is one to which subsection (5) applies; and

(b)    arises from a * CGT event happening in relation to a * CGT asset that is or was a * residential dwelling;

then so much of the capital gain as is worked out as follows is a deferred residential capital gain :

Amount of the * capital gain

×

Residential accommodation days Days in the pre-July 2027 ownership period

where:

pre-July 2027 ownership period
means the number of days in so much of the following period:

(a)    unless paragraph (b) applies - your * ownership period of the * CGT asset;

(b)    if because of section 115-215 you are taken to have made the * capital gain as a beneficiary of a trust - the trustee ' s ownership period of the CGT asset;

as:

(c)    ends on 30 June 2027; and

(d)    does not include a day or part of a day for which you can reasonably expect to disregard the capital gain because of Subdivision 118-B (about the main residence exemption).

residential accommodation days
means the sum of:

(a)    the number of days in the pre-July 2027 ownership period in which the * CGT asset is used, or held, solely for the provision of residential accommodation; and

(b)    for each other day in the pre-July 2027 ownership period - the fraction of that day that represents the extent to which, on that day, the CGT asset is used, or held, for the provision of residential accommodation.

Does the capital gain arise from a deemed sale on 30 June 2027 ?

102-6(5)    
This subsection applies to a * capital gain you have made if:

(a)    paragraph 112-160(3)(a) or 112-170(3)(a) treats you as having made the capital gain; or

(b)    because of section 115-215 , you are taken to have made the capital gain as a beneficiary of a trust in relation to the trust ' s deferred gain (within the meaning of paragraph 112-170(3)(a) ).

Note 1:

Subsection 112-160(3) covers individuals who are Australian residents. Subsection 112-170(3) covers trusts.

Note 2:

Paragraph (b) can cover a capital gain taken to have been made by any of the trust ' s beneficiaries, not just beneficiaries who are individuals and Australian residents.

Note 3:

Section 112-175 applies to assets that were pre-CGT assets on 30 June 2027. Section 112-175 has the effect that a capital gain from a CGT event happening on or after 1 July 2027 in relation to such an asset will be either a residential capital gain or a non-residential capital gain.