How do I calculate CGT for sale of partial pre-CGT inherited vacant land?

Question

AriATO · Accepted Answer

The cost base (CB) of the vacant is calculated as follows: - Your original interest 33.33% in the vacant land is $83,325  (0.3333*250,000). The pre 1985 interest in vacant land is tax free. Accordingly, the cost base (CB) is equal to 33.33%  of the capital proceed which is $250,000. - The 1990 inherited 16.67% interest from mum is not a pre-CGT asset so its CB is $25,005 (0.1667*150,000). For more information on how to calculate CB, go Cost base of inherited assets (https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/inherited-assets-and-capital-gains-tax/cost-base-of-inherited-assets). - The 50% interest inherited from dad comprised his pre-CGT 33.33% interest plus the 16.67% inherited from his wife in 1990. The CB of dad's original 33.33% interest is $66,660 (0.3333*200000). The cost base of the Inherited 16.67%interest from mum in 1990 is $25,005 (*0.1667* 150000). - The CB of the land is $ 199,995 ($83, 325 (step1) +$25,005(step2)+( $66,660 +$25,005)(step 3)) - The assessable capital gain is $50,005 (250000-199995). The difference between your CB and the ATO's CB is that the inherited percentage from your dad comprised 33.33% pre-CGT and a 16.67% post CGT interest and you must make an adjustment for that as showed in step 3. The $250,000 on the ATO site is likely from a third party. For more information on information provided to the ATO, go to Third-party reporting (https://www.asx.com.au/markets/company/yrl). Capital gain is calculated using the formula Capital proceeds less cost base. For more information go to Calculating your CGT (https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt). You can calculate your capital gain either manually or using our Capital gain calculator (https://www.ato.gov.au/calculators-and-tools/capital-gains-tax-record-keeping-tool). Australia's income tax system works on self-assessment. This means, we accept the information you give us is complete and accurate. We will review the information you provide if we have reason to think otherwise. For more information go to How the self-assessment system works (https://www.ato.gov.au/individuals-and-families/your-tax-return/self-assessment-and-the-taxpayer). The figure $166,675 (0.6667*250000) is the assessable amount of the capital proceeds rather than the capital proceeds, There are a number of ways (https://www.google.com/search?client=firefox-b-e&q=How+to+lodge+tax+returns+ato), online with myTax, registered tax agents or by paper, you can lodge your tax return. For more information lodging online, go to Lodging a tax return (https://my.gov.au/en/services/work/currently-employed/tax-when-you-work/lodging-a-tax-return). Regardless of which lodgment method you choose, you need to complete Question 18 in Tax return for individuals( supplementary section). For the sale of your vacant land, you need to complete Labels G, A (net capital gains) and H (Total current year capital gains) . For what Code to insert at Label M , go to 18 Capital gains 2023 (https://www.ato.gov.au/individuals-and-families/your-tax-return/instructions-to-complete-your-tax-return/paper-tax-return-instructions/2023/supplementary-tax-return/income-questions-13-24/18-capital-gains-2023). If you have a capital gain only from the sale of the vacant land, you return $50,005 and $25,002 at label H and A respectively. The amount at label A, which allows for the discount, is added to your assessable income.

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