1 Does CGT event A1 apply to you when you transfer your 50% ownership interest in the property as joint tenant to your family member who will become the sole owner?
1 Yes. Question 2 Are you entitled to claim the capital gains tax main residence exemption to disregard any capital gain or loss on the transfer of the property to your family member? Answer 2 Yes. This ruling applies for the following period : For the income year ending DDMMYYYY The scheme commenced on: 1 July 20XX
You and your Child A purchased vacant land located at X (The property), in a contract dated DDMMYYYY for $X as joint tenants. You are an Australian resident for taxation purposes. Settlement of the property you purchased occurred on DDMMYYYY. Shortly after you built your main residence on the land. You have lived in the home with your Child A for the entire ownership period since construction was completed. You do not have an ownership interest in any other properties worldwide. The land is X square metres which is less than 2 hectares. The property has never been used to produce income. In the 20XX-XX income year, you will transfer your 50% ownership interest to your Child A who will become the sole owner of the property. You will not receive any consideration for the transfer however land transfer duty will be paid on the transaction.
Income Tax Assessment Act 1997 section 102-5 Income Tax Assessment Act 1997 section 102-20 Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 section 110-25 Income Tax Assessment Act 1997 section 116-30 Income Tax Assessment Act 1997 Subdivision 118-B Question 1 Summary Disposing of your 50% interest in the property to your Child A is treated as a CGT A1 event. Detailed reasoning Your assessable income as an Australian resident includes your net capital gain (if any) for the income year (section 102-5 of the Income Tax Assessment Act 1997 (ITAA 1997)). A capital gain or capital loss is made only if CGT event happens (section 102-20 of the ITAA 1997). CGT event A1 occurs when you dispose of a CGT asset. You are considered to have disposed of a CGT asset if a change