Private ruling: Capital gains tax – amalgamation of titles
Date of advice: 16 April 2018
Published: July 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Did a CGT event occur when there was an amalgamation of titles on your pre CGT property? | A1: No

Relevant facts and circumstances: You and your spouse purchased a property in 19XX. You recently aligned the property boundary of both Allotments to allow direct vehicle access to the existing dwelling The boundary realignment has allowed direct access to occur and has resulted in a new title being issued Ownership of the property has not changed.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10

Reasons for decision: Summary: CGT event A1 happens if you dispose of a CGT asset (subsection 104-10(1) of the ITAA 1997). You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. Generally, CGT event A1 will happen when the titles of two or more properties that are owned by different entities are merged. This is because each co-owner acquires an interest in the property previously owned by the other entity as a result of the merger. Similarly, subdividing land does not result in a CGT event if you retain ownership of the subdivided blocks. Therefore, you do not make a capital gain or a capital loss at the time of the subdivision. In your case you and your spouse purchased property in 19XX. You have aligned the boundary of the property which has resulted in the issuing of a new title. The alignment of the boundary did not result in the change of your ownership in your original property. Therefore, CGT event A1 will not happen and the original property owned by you before the issuing of the new title will continue to be owned by you after the issuing of the new title. The property keeps its pre CGT status. No other CGT event occurred when the boundary was aligned or when the new title was registered.

ATO view documents: Taxation Determination TD 8