| Disclaimer This edited version will be removed from the Database after 30 September 2025. If you believe the issues detailed in this edited version warrant retention in an alternative form, email publicguidance@ato.gov.au This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011567152608
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Capital gains tax - Pre-CGT land - Joint ownership - Subdivision - Transfer to spouse
Question:
Does the portion of land transferred from your spouse to you sometime after 20 September 1985 retain its pre-CGT status?
Answer:
No.
This ruling applies for the following periods:
Year ended 30 June 2009
Year ended 30 June 2010
The scheme commences on:
After 20 September 1985.
Relevant facts and circumstances
Relevant facts
Prior to 20 September 1985 you and your spouse jointly purchased a five acre parcel of land.
You and your spouse built a dwelling on the land prior to 20 September 1985 and the dwelling was your main residence for a number of years.
Later the five acre parcel of land was subdivided into two, two and a half acre blocks. The block with the dwelling built on it prior to 20 September 1985 was known as A. The vacant land block was known as B. As a result of the subdivision you and your spouse were joint owners of both A and B.
After the subdivision a dwelling was built on B and this became your main residence. The original dwelling on A became a rental property.
A few years later your spouse transferred their 50 percent ownership interest in A to you. This meant you had two separate 50 percent ownership interests in A;
· a 50 percent ownership interest in A acquired prior to 20 September 1985 (pre-CGT); and
· a 50 percent ownership interest in A acquired after 20 September 1985 (post CGT asset).
A few years later you subdivided A into three equal blocks.
You have since sold the three blocks.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10,
Income Tax Assessment Act 1997 Section 108-7,
Income Tax Assessment Act 1997 Section 112-20,
Income Tax Assessment Act 1997 Section 112-25,
Income Tax Assessment Act 1997 Section 115-5,
Income Tax Assessment Act 1997 Section 115-10,
Income Tax Assessment Act 1997 Section 115-15,
Income Tax Assessment Act 1997 Section 115-20 and
Income Tax Assessment Act 1997 Section 115-25.
Reasons for decision
Summary
The portion of land transferred from your spouse to you in after 20 September 1985 does not retain its pre-CGT status.
Detailed reasoning
Two separate ownership interests
The transfer of an ownership interest in a property from joint names to an individual name results in a change of ownership in the property. CGT event A1 happened when your spouse transferred their 50 percent share of A to you sometime after 20 September 1985.
After your spouse transferred their 50 percent share in A to you, you then owned two separate 50 percent ownership interests in A. The first you acquired before 20 September 1985 (a pre-CGT asset) and the other 50 percent interest you acquired sometime after 20 September 1985 when your spouse transferred their share of A to you (a post-CGT asset).
Subdivision
The sub-division of A into three equal blocks is not a CGT event, therefore the date of acquisition of your two separate ownership interests in A remains;
· 50 percent ownership interest acquired before 20 September 1985 (pre-CGT asset); and
· 50 percent ownership interest acquired after 20 September 1985 (post-CGT asset).
Disposal
When you disposed of the three subdivided blocks of A, CGT event A1 happened.
Paragraph 104-10(5)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) states that a capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985. In your case, you will only be able to disregard any capital gain or capital loss in regard to your 50 percent ownership interest in A that was acquired before 20 September 1985.
Notes:
Section 149-30 of the ITAA 1997 has no application to your circumstances, (to the interest you acquired from your spouse) because you acquired this interest after 19 September 1985, (paragraph 149-10(a) of the ITAA 1997).
There are no capital gains tax exceptions or exemption for transferring an asset to a spouse, except in the circumstances for a marriage breakdown under a family court order.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
