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Edited version of your private ruling
Authorisation Number: 1012130814098
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Subject: Capital gains tax (CGT) - subdivision - pre CGT asset
Question:
Does a CGT event happen upon the subdivision of land?
Answer:
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You owned a property with your relatives (both deceased)
You purchased your relatives interest during their lifetimes and have exclusively owned the property prior to 20 September 1985.
You will subdivide the property and obtain three titles.
You have supplied the following document which forms part of, and should be read in conjunction with this private ruling.
Diagram of certificate of title
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20
Income Tax Assessment Act 1997 Section 112-25
Income Tax Assessment Act 1997 Subsection 112-25(1)
Reasons for decision
You can make a capital gain or capital loss if and only if a CGT event happens to a CGT asset.
Generally, CGT applies to all changes of ownership of assets that occur on or after 20 September 1985.
For CGT purposes, when a block of land is subdivided, the original land parcel is divided into two or more separate assets.
Subdividing land does not result in a CGT event if you retain ownership of the subdivided blocks.
Where pre-CGT land is subdivided after 20 September 1985 the land will maintain its pre-CGT acquisition date because there is no change in ownership.
In your case, you will be subdividing land you acquired pre-CGT and there will be no change to your ownership interest, no CGT event will happen upon the subdivision of the land and your subdivided blocks will maintain their pre-CGT acquisition date.