Private ruling: Capital Gains Tax – pre-CGT land
Date of advice: 31 July 2018
Published: October 2018
Ruling period: 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will land acquired prior to 20 September 1985 retain its exemption from capital gains tax (CGT) under a marriage breakdown rollover provision? | A1: Yes. Having considered your circumstances and the relevant factors, the rollover provisions under Subdivision 126-A of the Income Tax Assessment Act 1997 (ITAA 1997) will apply. You are taken to have acquired your former wife’s share in the property before 20 September 1985 and it will retain its exemption from capital gains tax. Further information can be found on our website ato.gov.au and entering Quick Code QC52251 into the search bar at the top right of the page. | Q2: Will the subdivided land retain the pre-20 September 1985 acquisition date of the original land and therefore be exempt from capital gains tax? | A2: Yes Having considered your circumstances and the relevant factors, as per section 112-25 of the Income Tax Assessment Act 1997 (ITAA 1997) when land is subdivided, the subdivision of the land does not constitute a CGT event. Subdivided pre-CGT land will retain its pre-CGT status. You are taken to have acquired your property before 20 September 1985 and it will retain its exemption from capital gains tax. Further information can be found on our website ato.gov.au and entering Quick Code QC55220 into the search bar at the top right of the page.

Relevant facts and circumstances: You and your spouse purchased a property as joint tenants prior to 20 September 1985. On the xx xxx xxxx both of you signed a Family Court Property Settlement Deed after separating which required the transfer of the property to you. The transfer was finalised. You stated since the property was purchased it has been your principal place of residence except for a short period where it was rented out. You now intend to subdivide the land and sell the blocks. You will maintain your main residence on one of the blocks and the rest of the land will be subdivided into a further x blocks. You advise that you will hold full title on all of the blocks. The only improvements to the land are what is required by Council for the land to be subdivided. You advise that you are not undertaking any business activity in relation to the subdivision. You are not undertaking the subdivision as a property developer. You may decide not to subdivide and sell the property on one title.

Relevant legislative provisions: Section 6-5 Income Tax Assessment Act 1997 | Section 15-15 Income Tax Assessment Act 1997 | Section 102-20 Income Tax Assessment Act 1997 | Section 108-70 Income Tax Assessment Act 1997 | Section 112-25 Income Tax Assessment Act 1997 | Section 126-5 Income tax Assessment Act 1997