Private ruling: CGT - disposal
Published: June 2013
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Question and answer: | Can you disregard any capital gain or capital loss you make when you dispose of the subdivided land? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You purchased a property prior to 20 September 1985. You intend to subdivide the property into two lots, and then sell one lot. You have made very minor improvements to the land which will not exceed 5% of the amount of money and property you receive from the sale of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-20 | Income Tax Assessment Act 1997 Section 112-25

Reasons for decision: Summary: Subsection 104-20(4) of the Income Tax Assessment Act 1997 (ITAA 1997) states that a capital gain or capital loss you make is disregarded if you acquired the asset before 20 September 1985. Furthermore, section 112-25 of the ITAA 1997 states that the subdivision of land does not constitute a CGT event. In your case you purchased the property prior to 20 September 1985, and since then have only made very minor improvements to the land. You intend to subdivide the property into two lots and sell one lot. As the subdivision does not change the pre-CGT status of the land, any capital gain or capital loss you make when you dispose of the land is disregarded.