Private ruling: CGT - replacement asset rollover
Date of advice: 22 August 2025
Published: 27 October 2025
Ruling period: 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the sale of the property attract capital gain if the sale proceeds are more than the property's cost base? | A1: Yes.Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a capital gain or capital loss results from a CGT event occurring. CGT event A1, occurs with the disposal of a CGT asset. A CGT event A1 may arise when property is sold (section 104-10 of the ITAA 1997).You make a capital gain if the capital proceeds from the disposal are more than the asset's cost base. | Q2: Does the rollover relief apply due to the replacement properties being purchased from the original sale proceeds? | A2: Yes . Section 124-70(1A) of the ITAA which defines the types of laws under which a compulsory acquisition must occur for a taxpayer to be eligible for CGT roll-over relief. Your circumstances meet this definition. Roll-over relief for the compulsory acquisition of a CGT asset is available where the conditions outlined in Subdivision 124-B of the ITAA 1997 are met. Paragraph 124-75(3)(b) of the ITAA 1997 requires you to incur expenditure in acquiring a replacement CGT asset no later than one year after the CGT event, or within such further time as the Commissioner allows in special circumstances. As noted in Taxation Determination (TD) 2000/41 - Income tax: capital gains: are the two requirements in subsection 124-75(4) of the Income Tax Assessment Act 1997 for a CGT asset acquired to replace an original asset alternative and mutually exclusive requirements?, the number of the replacement assets does not need to correspond to the number of original CGT assets. In your case you have purchased replacement properties and using those for the same purpose which you used your original Property, therefore, rollover relief applies.

Relevant facts and circumstances: In XX 19XX the taxpayer (TP) and late spouse purchased a residential unit (the Property) at XXX. The Property was used as a rental property to derive income. In January/February 20XX the TP and late spouse moved into the Property and lived in it as their main residence. They continued to live in it until the TP's late spouse passed away in XX 20XX. The Property is in a block of XX units subject to Strata Plan. The late spouse's share of the Property was inherited by the TP following Grant of Probate of the late spouse's Estate in XX 20XX. Following the Grant of Probate the Property recommenced being a rental property again. Around the XX XX 20XX the TP was approached by the Developer seeking to purchase the Property. The Developer confirmed the TP was the only owner of a unit (the Property) in the Strata Plan who had not agreed to sell their strata lot to the Developer. The Developer also confirmed if the TP did not agree to sell the unit, they would commence Strata Renewal Process Proceedings under Part 10 of the Strata Schemes Development Act 2015 (NSW). The Developer incorporated a Unit Trust (the Purchaser) to undertake the purchase of the Strata Plan. On XX XX 20XX the Purchaser and the TP entered an Options Deed which was exercised on XX XX 20XX and allowed the Purchaser to acquire the Property for $XXX. On XX XX 20XX the TP and the Purchaser entered a Deed of Variation that extended the time for completion and increased the purchase price for the Property from $XXX to $XXX. On XX XX 20XX the Contract settled. The sale proceeds are more than the property's cost base. On XX XX 20XX the TP entered a Contract for Sale to purchase a property located at XXX (Property A) for $XXX which settled on XX XX 20XX. On XX XX 20XX the TP entered a Contract for Sale to purchase a second property located at XXX (Property B) for $XXX which settled on XX XX 20XX. The TP maintains that both Property A and B are replacement assets from the sale of the Property and used to derive rental income. They are used for the same purpose as before the original property was sold.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 124-70(1A) | Income Tax Assessment Act 1997 Subdivision 124-B | Income Tax Assessment Act 1997 paragraph 124-75(3)(b) | Income Tax Assessment Act 1997 subsection 124-75(4)