Private ruling: CGT and land sub-division
Published: January 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2012

Ruling: Q1: Will you be liable for capital gains tax (CGT) on the disposal of your sub-divided blocks? | A1: No.


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

Reasons for decision: Summary: CGT event A1 in section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997), relating to the disposal of a CGT asset, will happen when you dispose of your property or each subdivided block. You will make a capital gain if the capital proceeds from the disposal of the block are more than the cost base of the block. You will make a capital loss if those capital proceeds are less than the reduced cost base of the block. Subsection 104-10(5) of the ITAA 1997, however, contains an exception, where any capital gain or capital loss made is disregarded if the asset was acquired before 20 September 1985. Where a block of land is subdivided, the date you acquired the original parcel of land is also the date you are considered to have acquired the subdivided blocks. In your case, you acquired the original parcel of land prior to 20 September 1985; therefore, any subdivided blocks will also be considered to have been acquired prior to 20 September 1985. As a result, any capital gain or capital loss you make on the disposal will be disregarded for CGT purposes.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You purchased your property prior to 20 September 1985. | The property has been your family home and main residence since purchase. | You do not run a business from the property | As you are getting older and finding it harder to maintain and manage the property, you are in the process of subdividing the property into several blocks. | You will continue to live in the house on block one and sell some of the sub-divided blocks now and a remaining block will be sold later.