| Disclaimer This edited version has been archived due to the length of time since original publication.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 your private ruling
Authorisation Number: 1012403152436
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. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: CGT and land sub-division
Question:
Will you be liable for capital gains tax (CGT) on the disposal of your sub-divided blocks?
Answer:
No.
This ruling applies for the following periods
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
1 July 2012
Relevant facts
You purchased your property prior to 20 September 1985.
The property has been your family home and main residence since purchase.
You do not run a business from the property
As you are getting older and finding it harder to maintain and manage the property, you are in the process of subdividing the property into several blocks.
You will continue to live in the house on block one and sell some of the sub-divided blocks now and a remaining block will be sold later.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 104-10.
Reasons for decision
CGT event A1 in section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997), relating to the disposal of a CGT asset, will happen when you dispose of your property or each subdivided block. You will make a capital gain if the capital proceeds from the disposal of the block are more than the cost base of the block. You will make a capital loss if those capital proceeds are less than the reduced cost base of the block.
Subsection 104-10(5) of the ITAA 1997, however, contains an exception, where any capital gain or capital loss made is disregarded if the asset was acquired before 20 September 1985.
Where a block of land is subdivided, the date you acquired the original parcel of land is also the date you are considered to have acquired the subdivided blocks.
In your case, you acquired the original parcel of land prior to 20 September 1985; therefore, any subdivided blocks will also be considered to have been acquired prior to 20 September 1985.
As a result, any capital gain or capital loss you make on the disposal will be disregarded for CGT purposes.
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).
