Private ruling: CGT - Pre-CGT Assets
Date of advice: 3 October 2018
Published: November 2018
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will your Pre-CGT land retain its Pre-CGT status if 50% of that land is sold to another party as tenants in common and a new dwelling is built on that land? | A1: Yes.

Relevant facts and circumstances: You own land with a dwelling that was purchased prior to 20 September 1985 (Pre-CGT). The land was valued at $X. The dwelling on the land was valued at $0. You are looking to sell 50% of your interest in the land to another party and hold the title as tenants in common. At a future date the dwelling on the land may be demolished and a new dwelling built at a cost of approximately $Y.

Relevant legislative provisions: Section 100-25 of the Income Tax Assessment Act 1997 (ITAA 1997) | Subsection 108-55(2) of the ITAA 1997

Reasons for decision: Summary: As per section 100-25 of the ITAA 1997, as the land and dwelling were purchased Pre-CGT the 50% share in the property that is retained will remain Pre-CGT in nature. The demolishing of the dwelling on the land will not change the Pre-CGT nature of the land but the new dwelling (costing approximately $Y) will be Post-CGT in nature as per subsection 108-55(2) of the ITAA 1997.