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Ruling
Subject: CGT and subdivision of land
Question and answer:
Can you disregard any capital gains on the sale of sub divided pre CGT land?
Yes.
This ruling applies for the following period:
Year ending 30 June 2014
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
You purchased land prior to 1985.
You intend to sub-divide this land and sell some of the land.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10.
Income Tax Assessment Act 1997 Subsection 104-10(5).
Reasons for decision
You only make a capital gain or capital loss if a capital gains tax (CGT) event happens to a CGT asset. Land and buildings are specifically listed under section 108-5 of the ITAA 1997 as CGT assets.
A capital gain or capital loss you make on the disposal of an asset is disregarded if you acquired the asset before 20 September 1985 (pre CGT).
For CGT purposes, subdividing a property into two or more separate CGT assets does not result in a CGT event as there is no change of ownership.
Therefore, the acquisition date of your ownership interest in the subdivided blocks will be the same as the date that you acquired the interest in the original property.
In your case, as you acquired the land before 20 September 1985, any capital gain or capital loss you make on the sale of the subdivided land will be disregarded.