The sale of his shares is not exempt from CGT under these provisions.

Sandra will have no CGT liability from the creation of the right.

However, under the CGT exemption, the CGT event will not happen.Ordinarily an arrangement like this may trigger CGT because it is the creation of a contractual or other right (CGT event D1).Garry obtains the money from selling shares in his investment portfolio. Garry agrees to pay $500,000 to Sandra to finance the build. Under the arrangement, Sandra agrees to build an attached flat on her property for Garry to live in.

Garry is eligible for a granny flat interest and enters into a granny flat arrangement with his daughter Sandra. For example, the sale of a property that was used in a granny flat arrangement, which has since terminated, is subject to the normal CGT rules.Įxample: eligibility of events for the CGT exemption Other CGT events that are not related to a granny flat arrangement, or sit outside the arrangement, are subject to normal CGT rules and may be liable to CGT. The exemption only applies to creating, changing or terminating a granny flat arrangement. This arrangement must not be commercial in nature.

the owners and the individuals with the granny flat interest enter into a written and binding granny flat arrangement.

one or more eligible individuals have an eligible granny flat interest in the property.

the owner or owners of the property are individuals.

When the CGT exemption appliesĪ granny flat arrangement is exempt from CGT if:

CGT exemption for granny flat arrangementsĬGT exemption for granny flat arrangementsĪ granny flat arrangement is a written agreement that gives an eligible person the right to occupy a property for life.įrom 1 July 2021, capital gains tax (CGT) does not apply when a granny flat arrangement is created, varied or terminated.

Find out if your granny flat arrangement is exempt from CGT.

Affect flat