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Edited version of private advice
Authorisation Number: 1051887725470
Date of advice: 20 August 2021
Ruling
Subject: CGT on disposal of pre-CGT asset
Question 1
Is the sale of land via a put and call option agreement that was acquired prior to 20 September 1985 subject to CGT?
Answer
No. The sale of the land is not subject to CGT as it is considered to be a pre-CGT property. All changes to the property occurred prior to 20 September 1985 and the changes to the beneficiaries post 20 September 1985 was less than a 50%.
Question 2
Are the distributions made by the trust to the beneficiaries in relation to profit from the sale of property acquired by the trust before 20 September 1985 non-assessable payments?
Answer
Yes. As the profit made is in relation to the sale of a property acquired by the trust before 20 September 1985 it is considered to be non-assessable income by the trust. Therefore, the trust will make a non-assessable payment to the beneficiaries.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
20 September 19XX
Relevant facts and circumstances
You are a family trust that was established on XX XXX 19XX.
The family trust was established with X principal beneficiaries as tenants in common with equal shares.
All changes to the trustee of the trust were completed prior to 20 September 1985.
All changes to the beneficiaries occurred post 20 September 1985 with X of the original XX beneficiaries remaining in place.
You purchased two separate lots prior to 20 September 1985.
The lands were held by the trustee prior to 20 September 1985.
No capital improvements have been made post 20 September 1985.
You are not a property development business.
You conducted a business of primary production on the land which ceased trading in 20XX.
Since the closure of your business the land has been used to derive rent and carry on a primary product business.
In XXX 20XX you entered into a put and call agreement to sell both your land which settles on XX XXX 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 149
Income Tax Assessment Act 1997 Subdivision 108-D
Income Tax Assessment Act 1997 Section 104-70(1)