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Edited version of private advice
Authorisation Number: 1051618931975
Date of advice: 9 December 2019
Ruling
Subject: Capital gains tax
Question
Is the estate required to pay Capital gains tax on the sale of pre capital gains tax (CGT) property?
Answer
No. You only make a capital gain or capital loss if a CGT event happens to a CGT asset. Land and buildings are specifically listed under section 108-5 of the Income Tax Assessment Act 1997 (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 the deceased's ownership interest in the subdivided blocks will be the same as the date that they acquired the interest in the original property.
In this case, as the deceased acquired the land before 20 September 1985, any capital gain or capital loss made on the sale of the subdivided land will be disregarded.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
The deceased acquired property by way of transfer in 197X.
This property was subdivided into two blocks.
One block was sold and the deceased retained one block.
The deceased died in XXX201X.
The property was sold in XXX 2019.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 108-5